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Divorce in the Age of Hiding Assets in Cryptocurrency

By George Khoury, Esq. | Last updated on

It is by no means unbelievable, especially for lawyers, that divorcing spouses will attempt to hide money and assets from each other. However, for an experienced divorce lawyer, finding hidden assets can often tilt the scales of justice in their client's favor and win them unending respect and referrals.

Divorce lawyers will claim to have seen most, if not all, of the usual tricks and will know how to discover hidden assets. But as cryptocurrencies continue to gain in popularity, market stability, and acceptance, finding money stashed away in cryptocurrencies will likely require family lawyers to learn a few new tricks.

Tracing the Untraceable Cryptocurrency

Much like the process of tracing community or marital property back to a single spouse's separate property, cryptocurrency can also be traced. Though some are harder to trace than others. Unfortunately, the party doing the trace will likely require assistance from a forensic expert, which can be rather costly. But, given the potential value of some of these cryptocurrencies, that cost can be easily justified.

Specifically requesting discovery as to cryptocurrencies, even if your client is unaware of any cryptocurrency purchases before or during marriage, should become a standard practice. If there appear to be curiously large gambling losses, or missing money, a forensic accounting is likely in order.

For practicing family attorneys, getting a basic understanding of how cryptocurrencies work is becoming more and more important, especially because more clients are asking if they can legally hide money via Bitcoin or other cryptos.

Found and Lost

One potential problem after a hidden cache of cryptocurrency is discovered can be gaining access to cryptocurrencies that are held, or get transferred, abroad, or to others for safe-keeping.

While courts may not be the most knowledgeable about cryptocurrencies, they've certainly seen countless divorce cases where a spouse attempts to hide money, assets, or even high value collectibles. Fortunately, if a clear showing can be made that money was transferred from a bank or other marital source into cryptocurrency, a court can exert pressure (via contempt orders) for the hidden assets to be given up, and can order a lopsided division of assets that accounts for the inaccessible cryptocurrency.

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