This interview is part of our new Blockchain In The Legal Industry series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and the legal industry.
In this interview we speak with Ian McAfee, co-founder and CEO of Shift Markets, to understand how his company is using blockchain and what the future of the industry holds.
1. What’s the story behind Shift Markets? Why and how did you begin?
IM: Shift started in 2009 to focus on the FX markets. We started in my apartment in the Upper East Side in Manhattan with a few thousand dollars. To grow company capital, we had to sell our time. Specifically, we provided expertise and infrastructure for electronic trading of currencies. It's been 10 years now and we've learned a lot about our industry, but also went through a lot of ups and downs building a business without investor capital. One thing that's changed in the last few years in our movements into the crypto/blockchain space. It has been one of our best decisions thus far and we caught a lot of the excitement of these markets growing. Our products and services are well-suited to the space with us having been in a similar market, we were in a great spot.
2. Please describe your use case and how Shift Markets uses blockchain:
IM: We’re excited about entering into the legal industry, as this is an industry where we see a lot of potential for disruption of traditional financing methods. Litigation funding in its current form has a lot of issues that we think our tokenization platform, Nova, could solve. Currently, the trade-off for liquidity when funding a case is parting with a substantial amount of the final settlement. As these are typically non-recourse investments, single entity financiers can pick and choose what cases they think are winnable. With our platform, operators, most likely the firm representing the plaintiff, would be able to tokenize the eventual settlement of a case and distribute them on the blockchain to raise those funds. This means that a greater number of investors can fund the lawsuit as opposed to a single shareholder, diluting the assumed risk. This could allow for more “long shot” cases to be properly funded. Investors can also trade those tokens on a secondary market while the case is still ongoing.
Because everything is on the blockchain, there’s also full transparency about who is providing the funding, how the capital is being raised and disbursed, and detailed records. Litigation funding has been under a lot of scrutiny lately so we've gotten feedback that this is badly needed.
3. Could you share a customer/user that benefits from what you offer? What has your service done for them?
IM: Our platform, Nova allows for a greater number of investors to fund litigation, diluting the assumed risk and making it easier to fund cases that have less of a surefire win and profit. The ROI on class action lawsuits, in particular, can also be really high, so this gives access to a totally new investment class for smaller investors. Investors who buy tokens in a case can also trade their investment on the secondary market if they feel the outcome of the case is changing or don’t want to wait for the payout. This last part is particularly useful as these cases can take years to come to a close. I can't share a specific company name, but our last client purchased the tokenization platform to tokenize their fund. The benefit for them is that investors can easily login and see their positions, as well as trade with other investors inside the platform.
4. What other blockchain use cases in legal industry are you excited about?
IM: Clients are approaching us with all sorts of new ideas. The great thing about Nova, and about blockchain, in general, is that this is a market that is still very much emerging. The use cases are endless and there are so many that we probably haven’t even thought of yet. We’re excited to help players in the legal field start incorporating blockchain into litigation funding, but we can also envision a future where every step of the case is on the blockchain as well.
5. Where will Shift Markets be in 5 years?
IM: Our goal is to continue to build our network of exchanges, assets, and liquidity. Each exchange we add is a new venue on the network with more investors and traders. We hope to have hundreds of venues within five years with many geographies, fiats, and types of assets. We feel this extremely helpful for anyone that wants access to global markets and liquidity. We want to be the first place to go for any person or entity wanting to get involved in digital assets.