Going through a divorce is stressful. Sometimes, it’s very stressful. One of the stresses is the uncertainty of how much of your money you will end up with at the end of the divorce.
When thinking about that issue, many people worry that their spouse may have hidden money. The thought being, “If my spouse has hidden $100,000.00 and we finish the divorce without me knowing about it, I won’t get any of that $100,000.00 and he or she will laugh all the way to the bank.”
These days, one place that people worry about money being hidden is Cryptocurrency, which is also known as Digital Currency and Virtual Currency.
There are a great many Virtual Currencies available to purchase, including:
Bitcoin (BTC)
Bitcoin Cash (BCH)
Litecoin (LTC)
Ethereum (ETH)
Ethereum Classic (ETC)
Zcash (ZEC)
Dash (DASH)
Ripple (XRP) and
Monero (XMR)
If your eyes just glazed over, please stop, take a breath, and keep reading – you do not have to become an expert to learn what you need to know about this stuff. In fact, you may be surprised to learn how – or how little – this brave new world can affect your divorce.
Let’s start with the basics.
In a divorce, both spouses are obligated to disclose everything that they know about any and all property that either of them has any interest in, if properly asked.
That being said, people can hide assets. People have always been able to hide assets and always will be able to hide assets. Digital Currency has not changed that truth.
If your spouse really wants to “hide” money, he or she can:
1. Open an account in a bank that you don’t know anything about;
2. Give money to a friend to “hold” until after the divorce;
3. Put cash in a safe deposit box;
4. Open an account with a casino;
5. Bury money in the backyard; or
6. Buy Bitcoin or other Virtual Currency.
And that is not a complete list.
In order to complete the task of “hiding,” however, your spouse must be willing to lie under oath – which can be a 3rdDegree Felony – if asked properly about the property during the divorce process. A 3rdDegree Felony can mean 10 years in prison, along with other problems.
So, when it comes to Cryptocurrency, the analysis is the same as with other types of money:
Has your husband or wife converted other assets to Digital Currency?
Have you asked them about it using proper discovery tools during the divorce process?
Are they lying about it?
One place to look for a possible conversion of assets to Virtual Currency is on a site like Coinbase.com.
All you have to do to buy Bitcoin, Litecoin, Ethereum or other Cryptocurrency is open an account, link a credit card or bank account, and start buying. All you have to do to sell the Digital Currency and convert it back to cash is go on the site and click to sell – just like you do with an online brokerage account.
Could your spouse have converted funds to Crypto using cash without there being a record in a bank account or credit card statement? Theoretically, yes, but they could also just hide the cash in a safe deposit box, “loan” it to a friend, or hide it in a shoebox or their desk at work.
The bottom line is this: Buying and selling Cryptocurrency is incredibly easy but using it to hide money in a divorce is simply a more complicated way to do what people have always been able to do. In fact, no matter how you buy it and sell it, the process creates more of a paper trail than simply hiding cash. And a paper trail – even a small one – increases the odds that the hidden assets will be discovered at some point.
By the way, one last thought: Cryptocurrency is incredibly volatile. Its value changes by the hour, literally. The value of Bitcoin has increased over 200% in the last 12 months. It has also fallen in value by about half, from what it was at the beginning of 2018.
Just to see how easy it was to buy and sell Crypto, I bought some Bitcoin Cash on January 27 on Coinbase.com, when the price was $1,650.11 per BCH. I sold it on July 18, when the price was $857.26 per Bitcoin Cash, so I lost about half my money. Luckily, I was just experimenting for the sake of this and other articles with $100.00.
There are much smarter and less risky ways to hide assets. I would not recommend that you stay awake at night worrying that your husband or wife has hidden assets in Cryptocurrency.