For spouses and children, the divorce process can be confusing, frustrating, and lead to heightened emotions and anger. Since a divorce can be tumultuous, it is recommended that a spouse works with a lawyer to help keep discussions civil and the process running smoothly.
Part of the divorce process is full transparent disclosure of all financial assets for fair property distribution. This is done to ensure the parties have an equitable distribution of their marital property. For a long time, this involved bank records, retirement account information, and the like. Nowadays, there is a new financial asset that gives rise to additional challenges: cryptocurrency.
Hiding assets in a divorce can get that spouse in trouble, even though this process is more common that most people realize. However, the nature of cryptocurrency makes it easier to hide assets.
What are Common Cryptocurrencies?
Bitcoin is the most widely used cryptocurrency, but other options include:
Cryptocurrency is not backed by any government like the U.S. dollar. Its value is determined solely by the market, which means it can fluctuate wildly. People often use cryptocurrency for online transactions where parties wish to remain anonymous or where discounts are given for using cryptocurrency.
Blockchain technology validates cryptocurrencies. The foundation of blockchain is to decentralize the database and ensure the owner of the cryptocurrency always has access to it, provided they remember their password.
Divorce Financial Disclosures
Cryptocurrency becomes important in divorce proceedings during the financial disclosure phase. Each party is required to disclose all of their assets and liabilities.
While many spouses will have full access to the same accounts, sometimes one spouse receives an inheritance during a marriage, which is kept separate from marital assets for many reasons. However, some spouses will also try to hide assets from their spouse. Cryptocurrency makes that much easier than it has been in the past.
Spouses who fail to disclose face legal trouble. Financial disclosure requires absolute transparency to ensure a smooth divorce process. When one spouse is not truthful, not only can that delay the process, but it can also create legal problems for the spouse hiding assets. Financial disclosures are signed under penalty of perjury so non-disclosure could leave that spouse facing criminal charges.
How Do I Recover Cryptocurrency in Divorce?
That does not mean it is impossible to discover cryptocurrency if one spouse tries to hide it from the other. If a spouse suspects their partner might be hiding assets in cryptocurrency, they have some options.
The simplest way to discover a spouse’s cryptocurrency stash is for them to admit it. Even if the spouse claims to have simply forgotten about their holdings, now that it is in the open, it is easier for lawyers to gain access to the account information to determine value. Do not count on a spouse randomly confessing if they are really trying to hide something.
When cryptocurrency is left on the exchange instead of withdrawn and held on a private server, the exchange still technically possesses the cryptocurrency. This means that if one spouse discovers the other spouse has cryptocurrency held at an exchange, their lawyer can get a court order requiring the exchange to release the funds.
If the other spouse has removed their cryptocurrency funds from the exchange and moved them to a private wallet or server, this makes it much more difficult to find and seize the assets. The way cryptocurrency secures the asset is to require a digital key to access.
Even if it is stored on the spouse’s computer, it can be difficult to get the key without cooperation from them. However, a search warrant may still be issued with enough evidence.
The last resort for the discovery of cryptocurrency from a spouse trying to hide it is a lawsuit. While a judge may issue an order requiring the other spouse to release the cryptocurrency, ultimately, the spouse is the only one with the digital key who can access the account.
In this instance, criminal charges may result either from a failure to comply with a judicial order or from a charge of fraud or perjury. When financial disclosures are signed, the parties swear that the information they have provided is accurate under penalties of perjury. If a spouse is hiding cryptocurrency, they have violated their oath.
Ultimately, the spouse seeking the asset also needs to determine if it is worth their time to take these more invasive measures. Cryptocurrency values fluctuate, it might also not be worth the time and effort required if the value is too little.
Cryptocurrency is Mostly Untested in Divorce
Cryptocurrency is extremely new. Due to its popularity, it is becoming more common to see spouses with cryptocurrency assets in divorce. The vast majority of spouses disclose the cryptocurrency assets they own, or both spouses already know about the asset well before divorce proceedings begin.
Due to cryptocurrency’s novel nature, courts have been relatively untested in dealing with cryptocurrency assets and their distribution. The same can be said for many divorce lawyers. That is why it is vital that when one spouse suspects the other spouse of hiding money in cryptocurrency, that they immediately speak with a divorce lawyer who has dealt with cryptocurrency assets in the past.
Bel Air Divorce Lawyers at Huesman, Jones & Miles, LLC Help Discover All Assets in Divorce Proceedings
Financial disclosure in a divorce is vital. If you think your spouse may be trying to hide assets through cryptocurrency, you need to speak with an experienced Bel Air divorce lawyer at Huesman, Jones & Miles, LLC who can help you discover those assets. Contact us online or call us at 443-589-0150 to schedule a free consultation and to learn more about how we can guide you through this complex process. Located in Hunt Valley and Towson, Maryland, we serve clients throughout Baltimore, Baltimore County, Bel Air, Bentley Springs, Columbia, Freeland, Hereford, Hampton, Westminster, Essex, Monkton, Sparks Glencoe, Parkton, Phoenix, Pikesville, White Hall, Carroll County, Harford County, and Howard County.