With the rapid growth of cryptocurrencies and other related financial technologies, there has been an increase in the number of crypto-related disputes. However, given the decentralised and cross border nature of crypto, solving these disputes through traditional means like arbitration or litigation has its limitations. Using forms of Alternative Dispute Resolution (ADR) like mediation could be a more time saving and cost effective method of dispute resolution.
Understanding Common Crypto Disputes
- Fraud Allegations
- Cases involving ponzi schemes, rug pulls and fraudulent Initial Coin Offerings.
- Breach of Contract
- Disputes over contract execution or other blockchain based agreements.
- Cases involving failure to deliver the promised service.
- Intellectual Property (IP)
- Disputes Disputes over patents, copyrights, trademarks or proprietary rights.
- Regulatory Disputes
- Cases involving compliance challenges due to the multiple jurisdictions that crypto operates across.
Challenges With Litigation to Solve Crypto Disputes
It is usually challenging for traditional litigation to solve crypto related disputes due to a few reasons. Firstly, the way cryptocurrencies operate across borders makes it confusing on which jurisdictions apply. Secondly, many crypto users operate anonymously or under pseudonyms, making it difficult to find the parties involved. Finally, the technical complexity of cryptocurrencies make it complicated for traditional courts to adjudicate disputes, thus taking more time and money to resolve the dispute.
Understanding How Mediation Works
Mediation is a structured, voluntary process where two parties enlist the help of a neutral, third party mediator to help settle the dispute without going to court, called a mediator. The mediator’s role is to hear out and understand each side’s perspective on the dispute. After that, the mediator helps to brainstorm ideas and facilitate the discussion between the 2 parties. While litigation and arbitration involves the third party making a final and binding decision, mediation allows the 2 parties to come to an agreement by themselves, with the help of the mediator, allowing them to control the outcome of the dispute. The final resolution is usually more agreeable to both parties because instead of the dispute ending in a win/lose situation, a mutually beneficial agreement can be reached instead.
Advantages of Mediation in Solving Crypto Disputes
There are many advantages in using mediation to solve crypto related disputes. One of the most important benefits is the confidentiality that is offered through mediation. Since crypto usually deals with sensitive information and IPs, using mediation where the proceedings and results remain completely confidential is beneficial for both parties. On top of that, the speed and cost effectiveness of mediation compared to litigation or arbitration makes it attractive since resolving the dispute quickly allows both parties to return their focus onto their business. Mediation also allows both parties to maintain or even build relations after the dispute. Instead of a ruling that only goes in one party’s favour. As crypto is an extremely complicated topic, expert mediators that are experienced in the field can be brought in to better facilitate the discussions. Finally, as mediations are a voluntary exercise, both parties are usually more committed to finding a solution together, making them more open to a compromise. Overall, these reasons all explain why mediation should be the method of choice in solving crypto related disputes.
Conclusion
Mediation’s distinctive features and process allows it to be a viable alternative to traditional litigation. It has many advantages which are well suited to address the shortcomings of litigation when it comes to dealing with crypto related disputes. Mediation’s cost effectiveness, confidentiality and speed of resolution are all attributes that should make meditation an attractive option to Fintech businesses worldwide. Please contact our panel of expert mediators if you require assistance in resolving your crypto dispute.
