Are you worried that your spouse might be hiding assets or income?
Gone are the days of hiding money under the mattress. The new method to squirrel away the assets: Cryptocurrency.
During a divorce, dividing the property between the parties can be a difficult process. Property is not limited to real estate or permanent fixtures; it can also be tangible and intangible. Tangible property includes physical objects, such as furniture and jewelry, while intangible property includes things such as stocks, bonds, and intellectual property. While divorce lawyers are accustomed to identifying and valuing property, the novelty of cryptocurrency has even the most experienced lawyers baffled.
What is Cryptocurrency?
Cryptocurrency is vastly gaining popularity as a form of currency. The appeal behind cryptocurrency is that there is no third-party involvement (i.e., banks). Therefore, there are no third-party regulations and minimal fees. While there is no “physical currency” such as cash, cryptocurrency is stored in a “virtual wallet” and allows users to make transactions.
Cryptocurrency transactions are recorded on a public ledger known as “blockchain.” The blockchain is visible to the public. When looking at the blockchain, one will just see numbers, commonly known as “coins.” Coins can be purchased or “earned” based on the type of cryptocurrency, such as Bitcoin. Earning a bitcoin is known as “mining.” The miners will audit the blockchain and earn “bitcoins” based on their work. Bitcoin is not the only form of cryptocurrency. Other popular forms of cryptocurrency include Bitcoin, Zcash, and Litecoin.
What You Need To Know About Cryptocurrency and Divorce
During a divorce, cryptocurrency presents a challenge as it is difficult to identify and trace. Cryptocurrency’s nature allows a deceitful and motivated spouse to conceal assets with relative ease. Unlike banks and financial institutions, there are no records. Without knowing the individual’s “private key,” the currency cannot be located. The private key is the unique password held by the owner permitting him to exchange or trade the coins on the blockchain (similar to a serial number). The private key is stored in a virtual “wallet.” Many owners of cryptocurrency use apps or software, such as an exchange to store their private keys.
It is important to have a complete picture of all property owned between the spouses. In North Carolina, any property owned, whether jointly or separately, can be considered for the purposes of equitable distribution. Keeping in mind, this does not mean every piece of property will be divided between the parties or that the property will be divided equally. However, a judge can take into consideration all property owned.
Hiring an Attorney
Ultimately, if you know or believe your spouse owns cryptocurrency, you should address this issue with your divorce lawyer. An attorney can help you subpoena an exchange for information regarding your spouse’s private keys and virtual wallets. It is critical to hire an attorney with an understanding of cryptocurrency and knowledge of what to look for when divorcing a spouse who may utilize cryptocurrency.