Several lawyers have discussed some of the challenges that arise from cryptocurrency ownership during divorce. The anonymous nature of cryptocurrencies creates the possibility for spouses to accumulate wealth that is concealed from their partner. However, this often can lead to parties searching for “pots of gold” that don’t exist.
Cryptocurrency Holdings Complicate Divorce Proceedings
Several lawyers specializing in divorce have shared some of the issues that are now arising during the judicial separation process as a consequence of cryptocurrencies.
One of the major challenges posed by cryptocurrencies is the ability for an individual to hide assets from their partner, owing to the anonymizing qualities of cryptocurrency. Toby Yerburgh, the head of family law of Collyer Bristow in the UK, recently told media that “Often in a divorce one spouse is looking for a pot of gold that doesn’t exist. But with cryptocurrencies, it’s possible the pot does exist.”
Mr. Yerburgh attests to having begun to receive cases involving one party suspecting that the other is failing to disclose cryptocurrency holdings following the spike in the popularity of virtual currencies last year.
Lawyers Seek to Educate Themselves Regarding Cryptocurrency
Victoria Clarke of UK-based Stowe Family Law, stated “Cryptocurrencies make things complex if you have a spouse who’s determined to hold on to their money, same as if they were hiding assets overseas. We have the tools to trace Bitcoin. The difficulty is that some lawyers don’t necessarily understand it yet — you need knowledge of the asset you’re trying to get hold of.”
The president-elect of the American Academy of Matrimonial Lawyers, Peter Walzer, states that many American lawyers are seeking to better understand cryptocurrencies in response to their increasing persistence as an issue during the matrimonial separation.
“I’m getting calls from lawyers all over the US trying to get familiar with the language around cryptocurrencies. We have to learn some new words for old ideas,” Mr, Walzer said. Jonathan Fields of Massachusetts-based firm Fields and Dennis described cryptocurrency as “now” comprising “a standard part of our discovery process. I will make sure I’ve got the right language and questions to ensure a partner discloses their cryptocurrencies.”
Uncovering Evidence of Cryptocurrency Ownership Comprises Long and Uncertain Process
Jo Carr-West of UK-based law firm Hunters stated that cryptocurrencies are “creating another layer of distrust that we haven’t had to deal with before,” adding that “The public perception that there is a lack of a paper trail causes the anxiety.”
Concerns that a spouse may be concealing undisclosed cryptocurrency holdings from their partner can add considerable time and expense to the divorce process, as the services of a digital forensics expert are often required in order to scour for evidence of hidden crypto. However, cryptocurrencies held offline will leave scant digital footprints, resulting in little guarantee that the efforts to evidence concealed holdings will prove fruitful.
“Courts Are Being Faced With a Challenge It Doesn’t Have the Power to Deal With”
Vandana Chitroda, a partner at Royds Withy King, has emphasized that challenges that the significant volatility in the virtual currency markets poses in attempting to estimate the value of cryptocurrency holdings during a divorce. “It’s not as straightforward as valuing your ordinary shares and investments, Mrs. Chitroda said. “There will have to be valuations made at every step in the proceedings. You would then have to agree a value on the date of the final hearing.”
Mrs. Chitroda also stated that “The courts are being faced with a challenge it doesn’t have the power to deal with,” adding that “The courts have only recently started allowing people to send documents to court using email. We’re going to really have to run to keep ahead of all of this. It’s a big challenge for all of us. We’re trying hard to educate ourselves and be ready.”
Do you think that cryptocurrencies pose unique challenges to divorce proceedings? Share your thoughts in the comments section below!
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Author: Samuel Haig