Want to take legal action against a crypto project that drained your wallet? Well, brace yourself; that’ll be a neat $1 million upfront, please. But don’t worry! There are actually some wallet-friendly options to help you navigate the murky waters of cryptocurrency litigation without liquidating your yacht fund.
For most victims of international blockchain scams, the road to financial recovery resembles a trip down a black hole. According to crypto law expert Jason Corbett, a court battle aimed at reclaiming $10 million to $20 million in the blockchain realm can cost anywhere between $600,000 and $1 million (which is quite a range, don’t you think?). And the average saga lasts about 2.5 years—perfect if you enjoy watching grass grow.
The silver lining? There are a plethora of options that won’t require you to sell your organs to pay the legal bill. Legal investment funds can swoop in to finance your case in exchange for a slice of the eventual judgment—think of it as venture capital for your impending lawsuit, except with more lawyers involved and fewer startup pitches.
“Most lawsuits—up to a staggering 95%—end in private settlements before they ever see the inside of a courtroom,” states Corbett, which sounds like a fancy way of saying that if you have a problem, just ignore it until it goes away.
Common Blockchain Disputes
With six years of experience in the field, Corbett manages an international law firm that specializes in all things blockchain. He recently mentioned to Magazine that witnesses to the crypto bear market have witnessed a sharp uptick in disputes regarding everything from fraudulent investments to broken contracts—in other words, business as usual in crypto-land.
Let’s take a look at some of the popular disputes cropping up like weeds in a neglected garden. The misuse of investment proceeds occurs when the fundraising cash goes towards buying grandiose yachts instead of funding actual business ventures. While it’s understandable that founders sometimes need a boost for their “team-building” yacht parties, salaries should be the only permissible route for investing capital—unless the new yacht is a tax deduction.
Then there’s the sale of faux crypto—selling tokens based on outright lies. One such notorious example is SudoRare, a marketplace that reportedly pulled a vanishing act with investors’ funds. The level of deception here could qualify as a crime, but proving it is akin to finding a needle in a haystack: you might just have to pray that the scammers leave an actual trail.
Investors looking to recover losses from failed tokens sometimes employ securities fraud claims, arguing that the initial offering was as legitimate as a three-dollar bill. Class actions against U.S.-based projects like Bitconnect and Solana highlight these attempts, but proving your case is still like trying to find endgame loot in a poorly designed video game.
Speaking of legal nightmares, good luck suing a DAO (Decentralized Autonomous Organization). Often these entities exist solely as whimsical lines of code, lacking any legal standing or personality—meaning you could end up dragging a ghost to court. Corbett raises a valid concern: unsuspecting DAO participants might inadvertently expose themselves to liability since they believe they’re acting on behalf of a real entity. Spoiler alert: it’s a digital mirage.
The High Cost of ‘Justice’
Irena Heaver, a lawyer who specializes in blockchain from the sunny haven of Dubai, warns that while victims cover civil litigation costs, criminal cases run like a free buffet—funded by the state. Unfortunately, chasing down scammers across international lines is about as common as honest politicians.
And who gets to decide on these criminal cases? Yep, you guessed it—the elusive state, which shows keen interest only when they feel like it. With burdens of proof as heavy as a bag of gold bricks, pursuing criminals in another country turns into an elaborate treasure hunt.
So, what happens if you can’t afford a million-dollar lawsuit or if your state-funded knight in shining armor is nowhere to be found? Enter alternative dispute resolution methods: less costly than a courtroom circus and often more effective. Mediation, for example, is like a friendly neighborhood superhero swooping in to help resolve conflicts without needing a gaudy costume.
If a case does go to court, however, prepare for an uphill battle. Judges often find themselves bewildered, faced with complex technicalities involving cryptocurrencies and their quirky associated terms. So now, it’s lawyer versus lawyer in a test of who can find the best ‘expert’ witnesses—because nothing says “justice” like fiscal debates over who has the most credible opinions, right?
Class-action lawsuits? Brilliant! They can pool resources and combine forces—similar to a superhero team-up but with backgrounds that would make your head spin. That’s how some law firms operate: no fees charged upfront, just a share in the settlement if the stars align.
One notable case includes a class action targeting billionaire Mark Cuban, who allegedly lured countless investors into the treacherous waters of the Voyager platform, turning dreams into mere crypto ashes.
Another ingenious method for financing legal battles is through legal financing—also known as the ultimate crowdfunding. An investor takes a risk on your pending lawsuit in exchange for a slice of the legal pie if you win. It’s like having a sugar daddy, but for lawsuits.
As Bill Tilley, an expert in legal financing, puts it, they sift through umpteen cases to find that one diamond where the potential return is as enticing as a get-rich-quick scheme. However, good luck collecting that judgment—but hey, at least you got to throw your legal woes at someone else.
Corbett, with his new initiative, Nemesis, aims to streamline this process for blockchain disputes. While some jurisdictions remain as difficult to navigate as a labyrinth, success is all about finding a legal-friendly environment where the payouts can actually reach those wronged.
In the grand scheme of things, it’s all about holding the bad actors accountable and hopefully making the crypto world just a tad less chaotic. Because five or ten years from now, we might just have a blockchain industry that’s not only robust but maybe—just maybe—user-friendly. Who needs a magic wand when you have legal funding?
Have a brilliant story idea? Feel free to shoot me a message at eliasahonen@cointelegraph.com or hit me up on Twitter.
