Divorce is never easy, and when financial transparency is questioned, the process becomes even more stressful. Suppose you suspect that your ex-partner is concealing assets, especially in a cryptocurrency like Bitcoin. In that case, taking specific steps to protect your interests and ensure a fair settlement is essential. Here’s a guide to help you navigate this complex situation.
Understanding Cryptocurrency and Its Role in Divorce
Cryptocurrency, such as Bitcoin, has become increasingly popular in recent years, offering a new way to store and transfer wealth. Unlike traditional financial assets, cryptocurrencies are decentralized, making them more difficult to track and trace. This is a positive trait, however, this can be particularly challenging in divorce proceedings, where full financial disclosure is critical to a fair settlement.
Why Cryptocurrency is a Concern in Divorce
One of the main reasons cryptocurrency is a concern in divorce cases is its potential for anonymity. Cryptocurrencies are stored in digital wallets, accessed from anywhere worldwide, and transactions can be made without a central authority. Great! BUT this makes it easier for someone to hide assets, intentionally or unintentionally, from their spouse during divorce proceedings.
Perhaps you discussed Bitcoin while together, which could indicate that your ex-partner has invested in cryptocurrency. Or have you invested and forgotten to disclose the investment. It can be challenging to uncover these assets without proper knowledge or the right questions to ask. Keep in mind that if these assets are not disclosed, it could lead to an unfair settlement and further costly legal proceedings and penalties for failure to disclose.
Steps to Take If You Suspect Hidden Cryptocurrency Assets
1. Educate Yourself About Cryptocurrency:
– Even if you’re not familiar with cryptocurrency, taking the time to learn the basics can empower you, giving you the confidence to ask the right questions and understand the potential for concealed assets.
2. Consult a Solicitor with Cryptocurrency Experience:
Not all solicitors are well-versed in the intricacies of cryptocurrency. It is crucial to work with a solicitor who understands digital assets and has experience uncovering hidden cryptocurrency in divorce cases.
– Your current solicitor may not be familiar with these assets, so consider seeking a specialist or asking your solicitor to collaborate with an expert.
3. Always Request a Comprehensive Financial Disclosure:
– During the discovery phase of your divorce, you have the right to request full financial disclosure from your ex-partner. This should include all digital assets, such as cryptocurrency holdings. You can ask specific questions like ‘Do you own any cryptocurrency? ‘, ‘Have you made any transactions with cryptocurrency? ‘, and ‘Do you have any digital wallets? ‘. Your solicitor will help you draft these requests.
– Your solicitor & barrister can draft discovery requests specifically addressing cryptocurrency, including asking for wallet addresses, transaction history, and any cryptocurrency exchanges your ex-partner may have used.
4. Hire a Forensic Accountant:
– A forensic accountant with experience in cryptocurrency can be invaluable in tracing hidden assets. They have the tools and expertise to follow the digital trail left by cryptocurrency transactions.
– They can also analyse your ex-partner’s financial records for unexplained transfers or investments that could indicate hidden cryptocurrency holdings.
5. Consider the Tax Implications:
– Cryptocurrency transactions have tax implications, and undisclosed assets could result in tax liabilities. Ensuring that all assets are disclosed and properly accounted for is essential for the divorce settlement and future tax filings.
Where Cryptocurrency Can Be Stored
Cryptocurrency can be held and stored in various forms, each with different levels of security and accessibility.
– Digital wallets, which can be either “hot” (connected to the internet) or “cold” (offline, for enhanced security). Hot wallets are typically software-based and accessible via apps or online platforms, making them convenient for regular transactions. On the other hand, cold wallets include hardware devices like USB drives or paper wallets that store private keys offline, offering higher protection against hacking.
– Exchanges where users can buy, sell, or trade digital assets. However, storing large amounts of cryptocurrency on exchanges is generally discouraged due to security risks, such as hacking or the exchange’s potential insolvency.
– Apps such as Revolut, Paypal and Robinhood all allow users to purchase crypto.
Final Thoughts: Protecting Your Financial Interests
Divorce is challenging enough without the added complexity of hidden assets. Taking proactive steps is crucial if you suspect your ex-partner is concealing cryptocurrency. Educating yourself, working with knowledgeable professionals, and using the legal tools at your disposal can help ensure you receive a fair and equitable settlement. Remember, you don’t have to navigate this process alone. Seeking the advice of experienced professionals can provide you with the support and expertise you need.
At J J Taylor & Co, we have experience handling cases involving cryptocurrency and other digital assets. If you’re concerned about hidden assets in your divorce, contact us today for a consultation. We’re here to help you navigate this difficult time with the expertise and support you need.