It’s not unusual in divorce for a spouse to allege that the other spouse is hiding assets. For years, those cases typically involved a spouse with a business with customers that often paid in cash. That type of income is easily stashed in a secret account. The suspicious party would bring in financial experts and forensic investigators to try to find the money. Increasingly, the hidden money isn’t cash; it’s cryptocurrency. As investments in cryptocurrencies become more popular, finding, tracking and valuing these assets is becoming an issue in divorce. If you are considering divorce and cryptocurrencies may be involved, here are a few things to know:
What is a cryptocurrency? A cryptocurrency is a digital or virtual currency that is traded on a decentralized network. Transactions are stored on a blockchain, which is a database that is communally maintained. The currency is secured by cryptography, unique digital signatures and complex mathematical algorithms which protect the currency from counterfeiting. Some of the best-known cryptocurrencies include Bitcoin, Dogecoin, Ether and others.
How do you know if your spouse has cryptocurrencies? In some cases, finding accounts may be relatively straightforward since there are exchanges like Coinbase, where people buy, sell and store digital currencies. However, individuals can also store their cryptocurrency in digital wallets which are harder to track. If you believe your spouse may be hiding investments in cryptocurrencies, you may need to hire a forensic investigator with specific experience in identifying and tracking digital assets.
How do you value cryptocurrencies? Prices can be volatile so valuation experts may be needed. If you are divorcing, it is important for the owner of the cryptocurrency to keep the other spouse apprised of changes in cryptocurrency investments as part of financial disclosure requirements in divorce matters.
Can a court seize cryptocurrencies? A court can order a cryptocurrency exchange to turn over funds. However, if your spouse transfers the money to a digital wallet and leaves the country or refuses to provide the digital key to the wallet, it may be difficult to get the money back.
What is the best way to resolve disputes? Ideally, spouses should cooperate and fully disclose their finances in divorce. Settling out-of-court is faster and less expensive. However, if a party is not honest, that can’t happen. Consulting an experienced divorce lawyer is the first step. An attorney can evaluate your case and advise you regarding the best path to take as well as recommend experts to help find hidden assets.
If you are considering divorce, contact me for a consultation.
