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Keep Bitcoin, other cryptocurrencies in mind in property division proceedings

Hiding marital assets in Bitcoin, as we mentioned in a recent post, is one of the strategies some married people are using to keep assets from being entered into property division in divorce. For readers who are unfamiliar with the term, Bitcoin refers to a “peer-to-peer electronic cash system,” as its inventor has defined it.

Bitcoin allows users to transfer money to each other without getting banks or governments involved. The lack of oversight and third-party involvement can be tempting to a spouse who wants to hide assets in divorce. It is important for divorcing spouses not only to know about Bitcoin and other cryptocurrencies, but also to request documentation in discovery and how to track it down when a spouse refuses to provide documentation. 

One important thing to understand about Bitcoin is that users receive a numerical wallet address where they store Bitcoins. While users do not know each other’s personal names, it is still possible to track users’ identities with digital forensic work. Some users also employ so-called Bitcoin mixers in order to make it more difficult to track transactions, but forensics work can also sort these things out as well.

Bitcoin is often purchased electronically, so if a spouse can get access to electronic transactions for Bitcoin, it will allow for an accounting of transfers and withdrawals. It isn’t always the case that the purchase of Bitcoin has a nefarious motive with respect to divorce. If a spouse can demonstrate that money used to purchase Bitcoin was eventually funneled back into marital accounts or property, the assets can be dealt with accordingly. In cases where the money can’t be accounted for, though, the spouse who lost out on the money should work with an experienced attorney to seek additional compensation in property division.

Bitcoin is sometimes purchased with cash, and in these situations tracking the transaction could be impossible. It is important, of course, to always work with an experienced attorney to do a thorough search for cryptocurrencies and other lesser known ways of hiding assets to fully account for all marital assets in divorce. 

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