Cryptocurrency: Divorce and Secret Assets
The term digital currency encompasses both virtual currency and cryptocurrency. Our Greensboro divorce lawyers have expertise in the emerging field of cryptocurrency and family law. We can help determine if your spouse is hiding cryptocurrency in divorce.
Part of divorce is the distribution of marital assets and property. In North Carolina, it is called equitable distribution. The law requires the classification, valuation, and distribution of all marital property. Our law also defines marital property as property that was acquired during the marriage. This may include Bitcoin, Ethereum, Stable Coin, or another cryptocurrency.
There are small technicalities within that broad definition, but for most couples, their property acquired while married will fall under marital property. The next step is to assign a value on that property. Typically, the date of separation cements the value of an asset to the value it was worth on the date of separation. Finally, the Court needs to distribute the marital property to a party in an equitable fashion.
Generally, the Court will want to distribute property in a 50/50 fashion. Any distribution over 50% to one party may result in that party paying a distributive award to the other party to make up for the balance. Finally, divisible property as passive appreciation on assets must also be classified, valued, and distributed. All this is to say, cryptocurrencies (crypto) are a part of this process and may present some challenges in family law given their nature.
Although the value of crypto can fluctuate quite wildly in some circumstances, they almost always have an exchange rate value based in USD. This at least makes valuation on the date of separation easier if you can ascertain the value on that date. But the first step in property division is to inventory all the property. Crypto’s novelty and virtual nature means it can be well hidden. Our divorce attorneys in the Piedmont Triad can help you understand cryptocurrency. It is enough of an issue to warrant serious discussions into money laundering and tax evasion.When to Suspect Crypto Assets Are Present in Your Divorce:
The first measure is prophylactic: be aware of your family’s finances. Get access to all bank accounts. Demand financial transparency. The easiest way to find out if money is being siphoned to crypto, is to see that money held in your traditional accounts is being transferred or withdrawn, or charges on credit accounts. Part of this also involves knowing your spouse. Are they financially or technologically savvy? Do they keep up with tech or financial news? Do they check their phones/iPads/computers many times during the day? Do they ever unironically utter the phrase, to the moon? Have they made expensive purchases (like a car or expensive jewelry) without you noticing any change to your accounts or credit?
The crypto ecosystem is becoming increasingly easy to access. There are many crypto wallets, which store crypto, and exchanges, where crypto can be bought/sold (exchanges also operate wallets). Almost by definition, these wallets and exchanges are virtual. Some of the most popular are Binance, Coinbase, Trezor, Exodus, and Ledger Nano X. All these wallets and exchanges have a mobile app or website that produce statements of transactions and balances, much like your traditional bank account.
If you see your spouse accessing these apps and websites, you can suspect that they may be dabbling in crypto. Your attorney can also ask for these statements or printouts. If your spouse is more savvy or distrustful of wallets/exchanges, they may have paper wallets or hardware wallets. A paper wallet is just that, papers that list all the necessary information to access crypto—it includes public addresses, private keys (the password to spend crypto), etc. Hardware wallets are typically stored on external storage media, like a USB.
If your spouse utilizes hardware and apper wallets, you may notice them being very secretive and caring over a certain USB or notebook--likely keeping these wallets in very secure locations like your
safe or a tucked-away cabinet. Tax returns may be another location to find evidence of crypto. Currently, they are required to be reported on tax returns.
Finding crypto may be difficult for users that are savvy and seek using crypto because of their ability to be hidden. But hiding assets in divorce is not a new concept. Our Greensboro divorce attorneys with experience in finding hidden assets, especially crypto, can speak with you if you suspect your spouse has been acquiring.