The FTX cryptocurrency bankruptcy and subsequent litigation (including this case, which includes celebrity spokespeople like Tom Brady, Steph Curry and Larry David) has blockchain heading to the forefront as an ESI source in discovery.
As reported here by Legaltech® News (FTX and Beyond: Blockchain Will Require E-Discovery to Think ‘Outside the Box’, written by Cassandre Coyer), the collapse of FTX last month, for instance, is bringing to light the need for legal professionals to understand how to review and produce data from blockchain, which (of course) is the backbone of bitcoin and other cryptocurrency exchanges.
Cassandre interviewed eDiscovery professionals, including Robert Hoff (a partner at Wiggin and Dana, where he leads the firm’s eDiscovery and electronic data practice group), David Cohen (chair of Reed Smith’s records and e-discovery group) and me.
Among the topics discussed are: how data from blockchain technology will fit the mold of existing eDiscovery platforms, how legal and eDiscovery professionals tend to push all ESI sources into the “document paradigm” and how that will be even more difficult to do with blockchain (which is comprised of transactions in a database). In addition, case law will likely be a driver toward best practices (and certainly what not to do), just as it has been this year for collaboration app data (such as Slack in the Red Wolf case I covered here a few months ago).
There will also be the battle of data privacy vs. the anonymity that is a characteristic of many of these cryptocurrency exchanges (including FTX). The numerous investors store their assets in “wallets”, which can be hot storage (online or on a network) or cold storage (offline in any type of local drive, including USB drives). The proportionality of collecting relevant information will be challenging as you must collect enough “blocks” in the blockchain to understand transaction flows without collecting the entire blockchain. Wallets may be the answer to that, but it may require techniques to “de-anonymize” bitcoin investors.
Not to mention the idea of review, which many people in our industry term as “document review” (which feeds the “document paradigm” comment I made above and in my interview with Cassandre). Review of the evidence here will certainly be different and will likely need to leverage a technology assisted review (TAR) approach even more than is the case for traditional document review.
So, get ready for blockchain heading to the forefront of as an ESI source in discovery! And check out Cassandre’s article here for more information and observations from the other eDiscovery professionals!
So, what do you think? Do you agree that blockchain is heading to the forefront of as an ESI source in discovery? If so, are you prepared for it? Please share any comments you might have or if you’d like to know more about a particular topic.
Disclaimer: The views represented herein are exclusively the views of the author, and do not necessarily represent the views held by my employer, my partners or my clients. eDiscovery Today is made available solely for educational purposes to provide general information about general eDiscovery principles and not to provide specific legal advice applicable to any particular circumstance. eDiscovery Today should not be used as a substitute for competent legal advice from a lawyer you have retained and who has agreed to represent you.