Cryptocurrency And Divorce: Who Gets The Bitcoin?
Cryptocurrencies are exploding in popularity—and value—these days. Unsurprisingly, cryptocurrencies have also started to become a common issue in divorce cases, where one or both parties have invested marital property or funds in such assets. But what can a court do to divide funds held in this fledgling asset class, especially when one of the benefits of cryptocurrencies is the anonymous nature of cryptocurrency transactions?
What are cryptocurrencies? For the uninitiated, cryptocurrencies are digital currencies that can be bought, sold, and traded on various online platforms and exchanges, such as Coinbase. You may have heard of Bitcoin, though there are many others that also hold significant value, such as Ethereum, Litecoin, Tether, Cardano, XRP, and Dogecoin. Transactions for these currencies are validated through the “blockchain”—or, a decentralized ledger of all transactions of a particular currency. Those transactions are generally fully anonymous, associated only with the wallet identification number of the owner(s), rather than the name of the owner. But for purposes of divorce law, cryptocurrencies can be treated like any other fungible asset, such as stocks, bonds, and other equities.
How is cryptocurrency dealt with in divorce? Cryptocurrencies can be divided in a divorce just like any other asset. But the biggest difficulty in dealing with cryptocurrencies in a divorce is finding them and determining how much of them each party owns (though recent actions by the U.S. Department of Justice indicate that cryptocurrency transactions and holdings may not be as anonymous as some assume). Their value is also extremely volatile, which can have an ever-shifting effect on equitably dividing those assets along with others during the divorce.
How do you determine if a party to a divorce owns any cryptocurrencies? By their nature, cryptocurrency transactions (the exchange of the currency between two owners) are generally anonymous, and determining the specific owner from any amount of currency can be nearly impossible from publicly available sources such as the cryptocurrency ledgers. Sometimes, a party to a divorce may try to hide some of their assets by investing in cryptocurrencies with the expectation that those assets may be harder to find. However, civil litigation tools, such as the discovery requests and subpoenas, can require that a party to a divorce disclose all cryptocurrency holdings to the other party. And even if one party is trying to hide those assets from the other as part of the divorce, skilled litigation counsel is frequently able to identify when a party has purchased cryptocurrencies through other available means and determine where those assets are being stored or held.
For example, cryptocurrencies must be bought and paid for using traditional currencies or other similar transactions on the front end. Those purchases will very often appear on banking records that can be requested or subpoenaed during the litigation discovery process. There may also be evidence of cryptocurrency purchases or ownership on a party’s computing devices, such as their laptop or smart phone.
Determining whether your spouse owns cryptocurrencies that may be subject to division in a divorce can be a difficult task. Thus, it is critical to have divorce counsel that has the requisite technical expertise and experience in dealing with complex financial assets, complicated civil discovery, and, when necessary, forensic investigation and analysis. At Buckhead Family Law, our experienced legal team is here to assist you in navigating cryptocurrency issues in your divorce to ensure that assets to which you have a marital claim are fairly and equitably divided. Schedule a consultation with our Atlanta family law attorneys today by calling us at 404-600-1403.