Cryptocurrencies are featuring more and more in modern divorce settlements. Whether it’s an ex-spouse concealing digital assets, tracing the use and ownership of cryptocurrencies, or knowing if they should be Disclosed Before Financial Settlement has taken place, there are a number of issues. In this article, we look at some of the key areas to consider when dealing with cryptocurrency in divorce proceedings.
A cryptocurrency is a type of decentralized digital currency. The verification of transactions are on a peer-to-peer system called the blockchain. They differ from traditional currencies where there is a centralized authority or middle man. There are currently around 18,000 cryptocurrencies (some with minimal trading volume and some with very high value) in existence. Many merchants now also accept them as a means of payment for products and services.
Yes. Before a settlement is made, each party should disclose their financial assets which are included within a document called a Form E. Spouses have a duty to disclose all financial assets in divorce proceedings and this includes cryptocurrencies. Despite this, it can be difficult to trace or prove the existence of digital currency ownership. Especially from those trying to conceal financial assets.
The nature of cryptocurrencies means that their owners can change in an instant. Therefore they can be hidden easily. Unfortunately, this has led to some people trying to maneuver their crypto assets in an intentionally complex way. Often to ensure they conceal them from their ex-spouse and to keep their real value hidden.
As digital currencies are relatively new, not everyone understands how they work and what is needed to access them. However, accounting forensics, along with crucial evidence, means you can file for a court injunction to freeze the assets of a former spouse if you believe they are trying to keep you in the dark about their finances. This order can also cover cryptocurrency exchanges, as well as the owner of the assets too. Therefore, leading to a more comprehensive view of a spouse’s financial position. In some cases, if there is sufficient evidence to indicate that your ex-spouse does indeed have cryptocurrencies, the value contributes to the final divorce settlement.
You will first of all need to clarify or make a reasonable assumption that there are assets being hidden. Consider if your ex-partner spoke about cryptocurrencies in the past. Or, perhaps they have knowledge of it, however little. Also, look at bank or credit card statements with large deposits and withdrawals. Before you embark on this route though, consider if it is worth pursuing this line of inquiry. It will be expensive and there is no guarantee of a result. Plus, consider the amount you think they are hiding when you are thinking of making an investment in investigating further.
Divorces that involve cryptocurrencies are increasing. These can sometimes involve large sums of money. Unfortunately, these cases can be difficult to solve without the help of experts. From either party, the non-disclosure of assets is never a good idea, crypto asset or not. If you or your former spouse do not fully disclose your financial details, the case could last several years, or go back to court later.
For more information on your crypto assets ahead of a divorce or more advice on whether your ex-spouse is concealing digital currencies speak to a specialized divorce lawyer. They can recommend what to do next.