Several years ago, cryptocurrency was a niche asset that maybe a few people owned. It was still considered a risky investment that not many people were familiar with. Since then, the value of crypto has skyrocketed. Today, many high net worth divorces include cryptocurrency assets. However, like many high-value assets, they are often concealed.
Bank accounts, stocks, and bonds are often hidden in a divorce, but they can be tracked easily. Crypto? Not so much, because it cannot be confiscated like these other assets. This has led to
concern in high asset divorces. There are many cases in which one spouse is actively participating in the cryptocurrency market, while the other spouse might have minimal expertise of the various aspects of the cryptocurrency investment.
Those who bought Bitcoin and other cryptocurrency in the early stages are now likely very wealthy. If their spouses don’t know about their purchases, then they may try to hide it so it’s subject to split in a divorce proceeding. This is, of course, illegal, but many people try it anyway. While full disclosure of assets is required in a divorce, many take the risk and fail to disclose crypto.
Getting caught hiding assets can result in fraud charges and the penalties that come with it. So while many people don’t willingly hide cryptocurrency and other assets, it does happen from time to time. And if a person does want to be spiteful and hide assets, cryptocurrency is a good choice because it’s a hard asset to track and prove ownership. That’s because it’s not tangible in any way, shape, or form. It is a solely digital asset that cannot be counterfeited due to high levels of encryption. It is also decentralized, which means there are no banks involved. Cryptocurrency can exist independently of governments and other authorities.
In the past few years, cryptocurrency has grown significantly in popularity. There are currently more than 15,000 cryptocurrencies in circulation, and more are created on a daily basis. The two most important ones are coins (which include Bitcoin) and tokens, which are programmable assets stored in a blockchain. A blockchain refers to the platform that brings together the coins and tokens. Blockchains store and maintain different types of information in blocks that are linked together through the use of cryptography, which is the process of writing codes.
If this sounds complicated, that’s because it is, which is why many people opt to invest in it (and hide it in a divorce). Bitcoin is a high-end product that is highly technical and sophisticated. It is an excellent investment choice, as funds may be moved quickly and easily. It can also be traded in large quantities, with millions of dollars able to be sold or laundered in mere minutes.
Bitcoin is not like making a deposit into a bank. Because of the anonymity involved, it’s challenging to trace, making it attractive to many people. It is an effective technique for concealing assets in high net worth divorces, as asset records cannot be collected from any financial institution or court order. There are no bank statements or any type of paper trail associated with these assets.
Hiring an Expert
If there is the possibility that cryptocurrency is hidden, the simplest solution is to get the spouse to admit to holding cryptocurrency and then negotiate a settlement. Barring this, forensic experts will be needed. It is possible that the spouse may have transferred funds or purchased or traded cryptocurrency on other exchanges. An expert will be needed to track transactions through wallet addresses and record the value of each transaction. This creates a money trail and can reveal what happened during each cryptocurrency transaction. However, such a search is not cheap, costing thousands of dollars. The benefits need to outweigh the risks.
A search warrant will likely be needed to perform searches on electronic devices. The experts will be looking for Bitcoin wallets, which operate similar to bank accounts. Any Bitcoin detected on an exchange can be blocked and seized by law enforcement.
Contact Us Today
Hidden assets are common in high net worth divorces. With cryptocurrency becoming more and more popular, lawyers and courts are becoming more savvy to how spouses are hiding it.
High asset divorces are complicated for many reasons.
Get the help you need from the Ohio high asset divorce attorneys at Lawrence Law Office. We offer a unique blend of business law and family law experience to ensure our clients are well-represented during their divorce. Fill out the online form or call 614-228-3664 to schedule a consultation with our office today.