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Crypto and Divorce

By CryptoCelt97 | LegalArticles | 2 Apr 2021


Crypto and Divorce

 

Crypto awareness is quickly becoming more and more mainstream with many sections of society engaging with it. But as it becomes more popular, there are many areas of law that have not yet adapted to it. Since an individual can anonymously purchase crypto, it is not always easy to track, and a spouse may not even be aware that an individual has bought some.

When coming to married couples, it would be very easy to purchase and hide crypto assets from their spouse. This could complicate matters when it comes to asset splitting during a divorce. Owning crypto could make it more difficult to gauge the wealth of an individual due to the anonymity and lesser extent of a paper trail. This is especially true with crypto wallets, where only the owner (hopefully) knows the key to access the wallet. Additionally, it would be hard to even identify the individual as the owner of the wallet due to the anonymity involved.

Financial matters can become very complicated upon divorce. To ensure clarity and fairness, both parties must disclose all financial assets and state their full income. Cryptocurrencies would qualify as a financial asset to disclose in the event of a divorce. But as mentioned, due to the anonymity involved a spouse may choose to hide the extent of his assets by investing in crypto.

During the disclosure process, both parties can raise questions of each other which may reveal that an individual owns crypto. Once crypto ownership is declared, the court has several powers to try and find these assets. The court may be able to trace the crypto by following a paper trail. For example, by looking at bank statements the court may see that payments have been made to Coinbase for example. The court also has the power of freezing your assets if they believe that an individual will try and dissipate his assets into crypto to make it more difficult to trace. The case of Robertson v Persons Unknown demonstrated this in practice. The court made a freeze order on a Coinbase wallet to stop the individual from buying or selling their assets, Coinbase cooperated fully with the order.

The subject of crypto in divorce is still very new and can be complicated. The important points to be aware of is that a party must disclose all financial assets to the court – including crypto. If there has been a failure of disclosure and the court later finds out that an individual does hold crypto assets, there will be consequences. Do not assume that your crypto assets are safe in the event of a divorce. The court does have powers to freeze accounts and wallets and an individual must disclose these assets.

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