Tag Archive for: crypro assets

Can Hiding Crypto from Your Ex Get You in Legal Trouble?

If you typed this article’s heading into an online search engine, chances are you’re considering hiding digital assets in your divorce case. Here’s why it’s a very bad idea.

The dramatic rise of cryptocurrency has led some spouses to hiding those digital assets during divorce settlements. In a divorce, both parties are expected to be honest about their assets, as all assets acquired during marriage are subject to division in a divorce. While property, stocks, bonds, bank accounts and 401(k)s can be easily tracked down, cryptocurrencies can be a bit more difficult. However, as it becomes more common, many lawyers are more aware of them and have started to learn the challenges surrounding them. 

Which begs the question, is it illegal to hide crypto from your ex during a divorce? 

What assets must be disclosed in a divorce? 

In an Illinois-based divorce case, it is legally required that each spouse discloses any and all assets, income and debt as part of the financial disclosure process. This also includes digital assets, such as cryptocurrencies. The issue with crypto, though, is enforceability and tracking it down if it is hidden. Regardless, spouses who fail to disclose still face legal trouble. Financial disclosures are signed under penalty of perjury so non-disclosure could lead to criminal charges. 

Tracking crypto

While there are ways to locate cryptocurrency activity, it is still difficult to discover and you could need experienced help from a Cryptocurrency experienced attorney. Older forms of crypto like bitcoin and ethereum are easier to track but other, more anonymous forms, are much harder for even experts to find. If exchanges are based in a foreign country, it can become even more difficult. However, it is still possible. Lawyers like the attorneys at Masters Law Group can grant subpoenas to get information if trades occurred in the United States. Additionally, forensic investigators or financial experts may be hired to uncover the assets.

What happens if I hide assets in a divorce? 

Hiding assets in a divorce will likely lead to discovery. Submitting incorrect documentation, failing to disclose assets or intentionally concealing them could lead to facing criminal charges. Perjury and contempt of court are the most common charges faced from these activities, but in extreme cases, you could pay large fines or even be forced to spend time in jail. 

Additionally, hiding assets is considered highly unethical by the court. Judges can use this information to make their own decisions relating to asset division. Oftentimes, attempting to hide your assets leads to your ex-spouse’s benefit, receiving a higher percentage of the total assets. 

Final Thoughts

Hiding assets is always a risky proposition and likely not worth it. Even though crypto is difficult to track, it’s still possible and the outcome would not be in your favor. It’s best to be honest about your assets during divorce proceedings, increasing the chances of getting your assets split fairly.

If you’re going through a divorce and are in need of legal help, Masters Law Group is here to help. Contact us today.

How is Cryptocurrency Divided in Divorce?

Cryptocurrency is an asset like any other kind of asset, and as a result, it may be considered separate property or marital property. What many people do not understand is exactly how complicated this can become. 

Cryptocurrency is a type of code or software that dictates how a unit of currency is produced and regulated.  Essentially, the creator of the cryptocurrency makes the units using an algorithm that relies on cryptography to secure the currency. The most common cryptocurrency, and the first of its kind, is Bitcoin, but there are thousands of other types that can be purchased or earned.

Despite Bitcoin and Crypto prices being extremely volatile, (the recent Crypto crash being a prime example), cryptocurrency is gaining in popularity and becoming a more and more common asset seen in divorce cases.

Crypto and Divorce Trend

Cryptocurrency has gone from an obscure hobby to a significant investment for many people across the country. As crypto assets like bitcoin rose dramatically in price, many investors became wealthy, especially those who entered the crypto market in the early days. However, cryptocurrency can also add new complications to a divorce, particularly when it comes to dividing assets between divorcing spouses.

Here’s a look at some commonly asked questions about cryptocurrency assets in a divorce.

Q: What is Cryptocurrency and is it Considered Marital Property?

A: Bitcoin is a cryptocurrency that allows secure transactions on the internet without having to go through a bank. Bitcoins can be exchanged or traded for other currency, products, or services and have increased in use since their creation in 2008. With this increase comes new challenges in a divorce when it comes to dividing up assets.

Cryptocurrency is considered an asset and as a result, it may be considered separate property or marital property. In some cases, growth in the value of cryptocurrency during the marriage may be considered a marital asset, even if the original purchase took place before the marriage. 

This is especially true when both spouses were involved in using cryptocurrency, investing in crypto assets, or planning to rely on crypto to fund future financial ventures. If you’re a crypto investor considering divorce, you should always consult with your lawyer about how you can expect your investments to be affected by the separation.

Q: Can You Lose Bitcoin in a Divorce?

A: Bitcoins are treated the same as any other asset in a divorce. If the bitcoin transaction was before the marriage, was given as a gift or through an inheritance, it is not marital property and cannot be divided. Therefore, if the transaction was during the marriage, it is marital property and can be divided.

When bitcoins are considered marital property, the easiest way to divide them is to split the determined value 50/50. Since most bitcoins can be cashed out in full, splitting the value 50/50 means each spouse would simply get half.

Another way to divide bitcoins is by negotiating other marital property in exchange. This means, if the spouse with the bitcoins wants to keep them, they can give up other marital property with the same determined value to the other spouse.

Q: Can Cryptocurrency Be Used to Hide Assets During Divorce?

A: A misinformation gap can easily arise especially when only one partner is involved in the crypto market and the other spouse has little knowledge on the aspects of crypto investments. This gap can lead to one partner not knowing what to look for when it comes to uncovering crypto holdings in the asset division process. 

The growing awareness of cryptocurrency technology has led to more divorce attorneys thinking about how to deal with crypto as a way of hiding assets. In some cases, a spouse may suspect the other party has undisclosed crypto holdings, while in other cases, they may notice that the other spouse suddenly seems to have a source of funds that is not tied to their existing employment or investments.

There are several ways that cryptocurrency assets may be discovered. The best-known and easiest to uncover are bitcoin and ethereum. Other cryptocurrencies may offer higher levels of anonymity. Those assets are much less valuable and more volatile than the better-known digital currencies. A forensic expert typically brought in by the parties, may search for cryptocurrency tickers, login credentials for exchanges, or keys for certain types of digital wallets.

Bank statements, credit card statements, and other financial documents may indicate transactions for crypto purchases from various exchanges.

Final Thoughts

During a marriage, it’s important for both partners to have an understanding of their marital income, and investments. With greater knowledge about finances shared between spouses, it can be far more difficult for one person to hide assets during a divorce. 

If you are concerned about how your or your spouse’s cryptocurrency assets could affect your divorce or the asset division process, Masters Law Group can help. Our team of highly trained and experienced family law attorneys are here to answer your questions about divorce and digital asset division.

Contact us today for more information, or to schedule a consultation.