We held a live AMA with Chief Investment Officer of Liti Capital, David Kay on 17th June 10:00 PM (UTC+8). Here’s the recap for those who missed it.
Serene: Before AMA start, can you introduce your team background?
David Kay: My name is David Kay, and I am the Chief Investment Officer of Liti Capital — the first litigation finance private equity fund for the DeFi community.
Our mission is a simple one: to bring justice to the people. It is to bring real life usage and assets to the blockchain and it is to democratize (#DeFi power) private equity.
For the better part of the last decade I was one of the founders and the portfolio manager for a USD $1b+ private equity firm based in New York and focused on litigation financing.
My partners in the amazing new project are (1)Jonas Rey, the CEO of Athena Intelligence, the biggest private investigation company in Switzerland; (2) Jaime Delgado, one of the best ranked ETH developer; and last (but certainly not lease) (3) Andy Christen, Project management expert and David Kay, who is a US citizen and an expert in litigation finance.
Serene: Any latest/ update news about Liti Capital you would like to share with our community?😀
David Kay: Our launch!! we are launching June 24th.
And we are going out strong. We have already raised $12mm, purchased 3 fantastic assets (cases) for our token holders and have secured a USD$1.2mm liquidity pool with a 3 year lockup!
And just so my marketing team doesn’t kill me, here’s how you get involved leading up to our launch on the 24th:
AMA Twitter Section Begin:
Q1: I read in an article that your $LITI token can provide high ROI even in bear market. This is a really impressive feature but how exactly will this be possible, how will you protect your token from bear market effects and bears?
David Kay: That’s great question. Litigation finance is a non-correlated asset class, or an investment that isn’t impacted (either positively or negatively) by movements in the market or economy. That’s because the value of a case, or litigation, depends on the facts of that situation and that’s it! For example, if someone owed you $10,000 and didn’t pay, and you brought a litigation against them for that money — the value of that litigation would be $10,000 whether the market (or economy) was up or down.
All the money we raise is going to buy these types of assets (in fact, we have already purchased more than USD $10mm of those types of assets), and we plan on returning the cash we make from those cases to our shareholders (irrespective of what else is happening in the market). Frankly, it’s about time these types of assets are made available to everyone and not just the 1%. Defi in action.
Hope that helps!
Q2: Why LitiCapital needs two tokens? what is the difference between wLITI and LITI? what features have each one?
David Kay: Thanks for this question — it’s an important one. My favorite way to describe this is in terms of pizza (which I love). In this example the LITI is a large cheese pizza, and the wLITI is the 8 slices that make it up. They are the same thing, indivisible, and inextricably intertwined, but they have different uses. And most importantly (assuming you don’t ever actually eat the pizza?) they can be endlessly taken apart and put back together without changing the overall value of what you have.
The LITI is our core equity token — it’s the functional equivilent of a share. That instrument has the voting rights, etc — but the LITI is not a tradable instrument. Having said that, if you have a LITI you can break it up into 5,000 wLITI’s which are tradable! And just as importantly, 5,000 wLITI’s can be turned back into a single LITI if/when you may want to — and as often as you want to! It’s kind of like taking apart the pizza into slices or putting them back into the pie (ok, ok….now I’m done with the pizza analogy…promise).
I don’t want to go too long with this question — but hopefully someone else will ask me about some of the other features of the wLITI….
Q3: I understand that Liti Capital merges Traditional Financial Markets with the Blockchain to Create Next Generation Fintech. Why do you want to combine traditional financial markets with blockchain technology? What would you like to change from today’s Traditional Financial market?
David Kay: This is another great question. And frankly, this is what really drives me — today’s financial market, especially with respect to private equity and litigation financing, is only available to the 1%. I was one of the founding partners and the portfolio manager of a large private equity fund for the better part of a decade, and my parents and siblings weren’t allowed to invest because they didn’t have USD$1,000,000 of assets. Imagine that.
It’s time for that to end. Blockchain and the Defi community are going to allow Liti Capital to bring private equity and litigation financing (and the returns that come along with it) to everyone. If we do our job right, we are going to turn the traditional financing market on it’s head by actually opening up the top returning asset classes to everyone. It’s time.
Again, I don’t want to go too long… but still hoping someone will ask what else we plan on doing for the community……;)
Q4: Why should users invest in LitiCapital’s equity tokens, what is the valuable opportunity you offer that makes you different from any other project in which they can invest?
David Kay: Amazing. I’m taking this one as being exactly that question. Thanks @ysasoma! In addition to being one of the first asset-backed companies to explore this space, and bringing private equity (and the 30–50% annual returns that can come with it) to everyone, we are laser focused on giving back to our community.
We have announced that we will be using 5% to 10% of every dollar we raise to bring cases on behald of the community against crypto scammers and crypto fraudsters. And we will be doing it at no cost and no risk to the community. Just to quickly put some numbers around that — at my last fund we raised USD$1 billion — which, if we did that here, would establish a fund of between USD$50mm and USD $100mm to fight these parasites. And we aren’t doing that to make money — we are doing it for the community. Whatever we recover, 90% of that will go back to our community (the 10% is for our overhead and expenses). This….this is our passion. Someone needs to stand up for this community, and with this community. Liti Capital wants to be that person. It’s time.
Q5: Liti Capital is bringing the litigation asset class to everyone through Blockchain technology. Can you please tell us what is security mechanism that LitiCapital? And your smart contract, did you audit on your own or by the helped of other security agencies? amd does it public?
David Kay: Another great question. You know, running a PE fund and making money for my investors/shareholders — I couldn’t feel more comfortable. I’m an old pro. But I’m new to blockchain. I’m getting better every day, but really rely on my partner, Jaime. He is the real deal. He’s the of technology development at Liti Capital, and a former researcher at the University of Geneva, with a PhD in electronics engineering. He’s also a senior blockchain developer, specialist in machine learning algorithms and advanced signal analysis. Yep — he’s that good.
But here’s what I can tell you — Liti’s smart contract follows the guidelines for share tokenization of the Swiss Capital Markets and Technology Association (CMTA). Additional to this, the smart contracts have been audited by an independent security agency: CERTIK. The audit report can be found here: https://www.certik.org/projects/liticapital. Finally, the smart contracts code is public and can be found in Liti Capital github repository.
I hope that helps!
Telegram Live AMA Begin:
Q6: Can you explain asset-backed equity tokens to the masses in your project? and how are they different from other tokens?
David Kay: This is a great question. Thank you for asking it. Asset backed tokens are a necessary next step for the community. Instead of investing in an idea — or a currency — whose value can change overnight, asset backed tokens like ours provides stability. We are taking NOTHING out of this launch ourselves. We are raising money to invest in assets that we believe will generate a return of between 30%-50% a year!
And then, we want to give those profits our to our token holders. Yep — that’s right. We are going to actually send money back to your accounts every time we make money. The value of our token, even though I’m sure it will still fluctuate with the market (at least in the beginning) should be based on the value of the assets we have — not on the whims of the market. Take a look at question #1 above.
Q7: Hello sir,,What is the role of tokens in the ecosystem? Where can community currently buy it and this #Liti Capital project ?? What is the functions of the TOKENS???🔥
David Kay: I really wanted to answer this question too…We take our role in the ecosystem, or community, very seriously. I’m lucky enough that at this stage in my career I can do only the things that I love — and I fell in love with this bc of what we are planning on doing with 5%-10% of the money we are raising. We are going to take 5%-10% of every dollar we raise and fight for wLiti holders who have been scammed. We are going to do it for free, and we are going to give everything but our costs and overhead back to the community.
That part of the portfolio is NOT a profit making enterprise. It’s an effort to use the very specific skill set we have honed over the last 10 years for the benefit of the community. As I mentioned above, if you trust us with USD$1b, we are going to establish a $100mm dollar pool that will only be used to help our community deal with these parasites. Stay tuned for our first announced case on this one — I think you guys will love it.
Q8: Many new projects initially developed well but were suddenly abandoned. How will Liti Capital manage the project to maintain its position in the market and become a good project in the blockchain world?
David Kay: Thank you so much for asking this Anastasia. As I mentioned above, I am an old hand in private equity, but new to this world, and that’s one of the things that was very important to me as well. The litigation funding game, and private equity, are generally longer term projects — and we have responsibilities to the people who are behind the cases we fund to be here for the duration. And, mark my words, I will make good on the promises I made to those people. Those families. Those persons who have been hurt and don’t have the money to fight back. But I needed more….And that’s why we are only launching AFTER having raised 12mm and having 3 assets already on the books That’s why we have a liquidity pool of $1.2mm and a THREE YEAR lock up. We aren’t going anywhere.
Q9: How do you generate revenue? Can we sure that we will get benefits if we invest in this project and the revenue model is beneficial for both investors and for the project itself?
David Kay: Such an important question! We invest in cases, and provide the strategic help and guidance, to plaintiffs that can’t afford to bring a case on their own. A quick example — lets say you stated a business. And you were absolutely killing it 10 years in. Then HugeCorp shows up and offers to buy you out. Your thrilled — you are going to make millions. But then, right before the close HugeCorp walks away, and claims that you violated the contract (spoiler: you didn’t) HugeCorp has the best lawyers in the world, is spending 10s of millions of dollars, and you have nothing. What do you do? Generally, and this is the sad part — HugeCorp wins (Or pays you some pittance to go away)
But not anymore. Now that same person can come to us. We will pay the millions of dollars, and we will get the best law firms in the world on the case. Now — lets say that the total value of the contract is 100mm. Before Liti — you got nothing or 1mm (maybe)…We will take some percentage of that return — lets say 20%, and if you win, or settle, you still end up on top. $80mm isn’t half bad! And there is never, EVER, any liability for the plaintiff. If we lose — Liti pays. Period. I hope that helps!
Q10: Token burning is a proven way to reduce the supply and increase token value/utility. Do you also have any plan for token burn Or any kinds of buy-back program?
David Kay: Another great one. I think the critical thing about how Liti plans on operating is that it is NOT a currency. We will only issue tokens if people pay for them — or earn them. So every time we sell a token — we raise more money. And NONE OF THAT MONEY GOES TO US. I know caps are lame — but that’s an important point. That money goes to purchase assets (and everything that goes into that process). And those assets will generate cash returns. The more assets we have — the more cash returns we provide.
If you look at Apollo or Blackstone (huge private equity funds) — the more money they raise, the more their stock is worth! That’s what we are — we are private equity for everyone.And here’s the real kicker — when we make money, we are planning on sending it out to you. So — it’s a somewhat dual answer. The more tokens we issue — the more assets we buy — the more cash for everyone. But we as a company need to be responsible with how we do it — having too much capital, and not investing that capital wisely in cases — that’s where it can start to hurt token holders. Having said that — we have capped the number of tokens we will issue, and you have my word that we will do our absolute best to only issue tokens when we think we have a use for them that will return way in excess of what you guys entrust us with!
Q11: What is the ratio between LITI and wLITI?
David Kay: The ratio is 5,000 to 1. Said another way — 5,000 wLiti’s will get your 1 Token. Now, this is a question I get all the time. Why? Who came up with 5,000 to 1. Well, for the first time ever — here is the (not so exciting) answer. Our investors were paying more than $50 a share for our tokens before we announced we would launch to the public. But we wanted to make sure this investment was accessible to everyone. That’s why we are all doing this — every person at Liti Capital eats, drinks and sleeps “Private Equity for All” And we wanted to make sure that rang true, so we set the ratio so that wLiti’s could start to trade in .01-.03 cents. So everyone can be a part of what we are doing here.
Q12: As I understand it, by issuing LITI Tokens, you take Liti Capital SA public in the crypto market, this system is similar to the traditional finance IPO method…
Well, will there be an upper and lower limit to the ownership of the $LITI token, an investor an unlimited number of $LITI? Can he become the owner and take control of the token?
David Kay: Great follow up question! Absolutely not. No minimums, and no different treatment. At Liti Capital everyone is treated the same. Whether you buy $1.00 or $1,000,000 you get the same tokens, with the same rights. I can’t stress this enough. The old ways need to end. These massive returns that you read about for hedge funds and private equity — that just can’t continue to only be for the 1%. It’s time for a change. The DeFi community is going to turn the finance world on it’s head. And by the way, while we do it — and I need to keep saying this — it going to be used to support wLiti holders who are scammed. If you trust us with $1b of capital — we are going to spend $100mm protecting our community. This is our company, and our community. And we are going to protect it.
Q13: What is the best way for me to stay up to date on your project? Could you please share your Twitter, Telegram, website, and other social media links so that we can locate you easily?
David Kay: Absolutely. And remember our launch is June 24th
Join the Liti Capital Telegram Community
Connect with Liti Capital on LinkedIn
Follow Liti Capital on Twitter
Follow Liti Capital on Medium
Q14: Related how to raise capital to buy asset ownership in legal cases, what’s differently Liti Capital from traditional private equity funds?
David Kay: Great question. And this is one of my favorite parts. Here’s the major difference…..its the “who” that is entrusting us. Until now — only large institutionalized investors have been allowed to participate in funding private equity (and getting the returns) You need to have $1mm in liquid assets to play. Why? Because if you have less than $1mm you can’t be trusted to make your own investment decisions? Frankly, I know some pretty stupid people that Have $1mm.
And I some of the smartest people I know don’t have that kind of cash. But, make no mistake about it, we are taking a huge risk. Instead of going to 5–10 large institutions and promising them special returns for giving us $50-$100mm each — we are going out to the DeFi community. We are going to prove that we can do this with 50,000 or 100,000 people investing whatever they are comfortable with. Everyone deserves the right to make their own investment decisions, and everyone deserves to have the oppotunity to make phenominal retuns with the protection of having a large asset base.
Q15: In which countries does Liti Capital currently follow cases, and are there specific types of cases it focuses on?
David Kay: Thanks for asking this. We are not country specific. You would be shocked if I were tell you all the different places we have worked in. The limitation for most of the portfolio will be places where there is a reasonable legal system and/or government so that if we win, we can get you paid. But for the 10%??? That’s a different ballgame. I will personally go to Antarctica to get one of these bastards if that’s where they are hiding
I actually can’t believe I haven’t gotten a chance to say this yet (bc it’s one of my favorites), but one of the most important things that drives me is: A judgement is just the single most expensive piece of paper you will ever own. The entire game here is NOT to win the case — it’s to get people paid That’s it. As fast and as much as possible. So — we will go everywhere (I actually think my team is putting together a map to go on the website that will show you all the places we have been), as long as we can get someone paid there.
Q16: — I understand that the LITI tokens represent a share of Lili Capital, and that 80% of the distributed profits will go to the Unitholders, but what happens when you lose a litigation? Do we, the shareholders, suffer the consequences as well?
David Kay: Another great one. Thanks Tahani! No…..and yes. We take on 100% of the risk and cost of the lawsuits. Our shareholders bear ZERO RISK of having to put in any more money than it cost to buy your token. Period, full stop. But if we do lose a case — that will have a negative impact on the value of the portfolio of assets we are managing on your behalf — and the token price may be impacted. Similarly — if we acquire new cases or win a case — that should have a materially positive impact on the value of the assets in the portfolio and the price of the tokens should react positively. My job as the CIO is to make sure we win (a lot) more than we lose. And you have my commitment that I will do everything in my power to make that happen.
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