When facing the prospect of divorce and division of property, many people’s initial thought is to hide their money, property, or assets. That is not easy (or legal) to do. In reality, with enough effort, almost every kind of asset can be found and tracked.
But there is one kind of asset that is almost completely anonymous, an asset that most people do not think about, know about, or even know how to find — Bitcoin and other forms of cryptocurrency.
Is Cryptocurrency an Asset?
Certainly, cryptocurrency is an asset in a divorce, subject to division like any other asset. The problem can be finding cryptocurrency, or valuing how much it is, or how much it is worth.
What is the Value?
Aside from the difficulty of locating cryptocurrency is the problem of valuing it. You only need to turn on the news to hear how volatile that cryptocurrency can be. Wild fluctuations can make cryptocurrency extraordinarily valuable or nearly worthless, often in just a span of a month or two.
That means that even if a spouse gets cryptocurrency in a divorce, it is hard to know whether the spouse is making out well or getting a worthless asset.
Finding cryptocurrency creates its own set of difficulties. You can send a subpoena to a bank for bank records to track down traditional assets. But there is no one clearinghouse or central bank for cryptocurrency; there is no record custodian. There is nobody to send a subpoena to and get a comprehensive list of deposits, assets, or withdrawals.
The best that can be done is to subpoena the crypto exchanges themselves, public markets that handle people’s cryptocurrency accounts.
The technology of cryptocurrency has meant that where the currency is involved, professional experts trained in tracking down these assets may need to be hired. These professionals are part forensic accountants and part computer forensic experts. Many divorce attorneys may not even think to ask for these assets.
Because there are so many different forms of cryptocurrency today—by some estimates, hundreds—each has its own blockchain, making it even easier for a spouse to distribute digital assets over multiple platforms or currencies.
There are even some cryptocurrencies that are so anonymous they disguise every element of every transaction. Many of these are disguised or shielded by privacy tokens. The passwords to these tokens can be held online, where they are easier to discover by forensic accountants, or they can be held locally, or offline, such as on a thumb drive, providing almost invulnerable security.
Some experts say it is impossible to reveal the information that some currencies keep anonymous. The best experts can do is to study the internal codes stored on the computers for evidence of cryptocurrency activity.
Of course, common sense can help as well. If a husband or wife shows an income of, say, $50,000 but is clearly living a lifestyle beyond that amount, or if there is a larger income, but traditional bank deposits do not show that money moving into bank accounts, it can be a sign that cryptocurrency is being used to hide assets.
We can help find the assets you need in your divorce case. Contact our New Jersey family law attorneys at The Law Office of Agnes Rybar LLC today for alimony or child support help.