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It is an increasingly common dilemma of the digital age; The intentionally anonymous nature of cryptocurrencies makes them notoriously difficult to handle in the context of divorce proceedings.
There are 2 main issues that emerge with cryptocurrencies in divorce from the point of view of a party to a divorce proceeding who suspects that his/her spouse owns cryptocurrencies; first, how to prove that he/she even owns those properties and second, how to deal with large fluctuations in valuation.
Cryptocurrencies in divorce – How to prove spouse owns cryptocurrency
Cryptocurrencies, of which Bitcoin is best known, are designed to facilitate anonymity. They are held in a digital wallet that generates ‘addresses’ for transactions, with no addresses written to individual names.
Therefore, if your spouse refuses to declare their crypto holdings there is no easy way to identify these holdings as there is no central authority through which one can property can be named. Instead, a more deliberate approach is required. The key is to find a chain to pull at that allows you to determine your spouse’s crypto entry or exit points; initial transaction.
Blockchain (a decentralized shared public ledger) records all of Bitcoin’s transactions, including the addresses it goes to and from. Therefore, if you can find a transaction that includes a Bitcoin address or even better a digital wallet that can be linked to your spouse, then you can track their transactions. via blockchain ledger (although here it is possible to use hybrid services to muddy the trail).
The best way to prove a spouse owns crypto in a divorce is to analyze his/her bank account as Bitcoin is usually purchased with regular currency (although it can be ‘mined’ ). Therefore, you should look for deals with crypto exchanges and more and more legitimate trading apps (Robin Hood) or payment companies like PayPal. More and more non-financial companies, such as Tesla, used to accept payments in Bitcoin, and such physical asset purchases always associated the cryptocurrency with a name and an address.
However, if a new Tesla doesn’t mysteriously show up in your spouse’s driveway, the next step is to review their tax returns for evidence of the crypto holdings being converted into cash. real money”. Bitcoin sales must be recorded as capital gains/losses and are therefore taxable. Forensic accountants in particular can play an important role in getting to the bottom of these issues.
Understandably this leads couples to become cyber-investigators and do some detective work on their own to find a storehouse of secrets. But be careful with the computer mouse finger triggering fun. Divorce parties must not access the spouse’s computer or phone without permission; Doing so could get you into trouble with the family courts, and possibly with the criminal courts.
Even if documentary evidence can’t be found that your spouse owned cryptocurrencies at the time of your divorce, if you can satisfy the court on the available evidence they do, (e.g. text messages) history or email from your spouse mentioning Bitcoin), the court may infer or order that other assets should be transferred to you in their stead.
It is important to make the non-disclosure party aware that it is not worth it for them to attempt to conceal crypto in this way; Penalties imposed by the courts for non-disclosure in divorce proceedings can be very severe and include imprisonment (or more commonly, dishonesty leading to lack of credibility, the introduction of adverse inference and more is paid to the other party by compensation).
If getting to the bottom on whether/how much Bitcoin is held turns out to be a forgotten hope, rest assured that courts have the power to reopen divorce settlements years later if possible. prove that either party did not disclose all of its own. /her property. For example, if you found out that your ex-husband or wife bought a Tesla from unspecified sums over 5 years, you could uncover the truth and reopen a previous divorce settlement. to get these properties. into account.
Pricing problem Cryptocurrency in Divorce
Unfortunately, the complexity doesn’t stop at just establishing cryptocurrency ownership. Cryptocurrencies are notoriously volatile, which means they are subject to large swings in value. Over the past two-year period, Bitcoin has increased more than seven times in value, although in just seven days in February of this year it lost a quarter of its value, before rising again in March. This makes it very difficult for the Court to determine the proper division of property upon divorce.
The most reliable method of dealing with such volatility is simply for the court to issue an order to transfer the percentage of holdings from one spouse to the other; however, that may not be particularly palatable to the inexperienced. Therefore, a more common approach, where sufficient assets are available, would simply be for the value to be determined in accordance with the market price at a fixed date and the equivalent value of the tangible or liquid asset. accounts are moved in their place.
With the emergence of Bitcoin and other cryptocurrencies, it is important to deploy a skilled attorney who can not only spot the signs when necessary, but also identify the appropriate professional. to get to the bottom of the amount and / or value of coins held .
Cryptocurrencies are becoming more and more mainstream and these issues are therefore becoming more common in family courts. Interestingly, China’s central bank is developing a form of government-managed cryptocurrency, while more and more mainstream companies accept cryptocurrencies as payment. The more popular mainstream cryptocurrencies become, the harder it is for them to remain anonymous and avoid creating a digital footprint. The wide-ranging powers of divorce courts in the UK, and the sly lawyers working in these courts, are now proving more than a match for hoarders.
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Important Note: All content on the website is for informational purposes only and is not investment advice at all. Your money, the decision is yours.
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