Financial disputes are not uncommon in a divorce, but matters involving Bitcoin and other types of cryptocurrency can be complicated.
Legally it can seem challenging to understand what happens with Bitcoin in a divorce because it was created to be something that was untraceable and easily hidden. Fortunately, it has evolved into something that can be traced when necessary.
The absence of laws governing cryptocurrency protection presents unique concerns in divorce cases where Bitcoin is involved.
If you have concerns about cryptocurrency or any other financial matters, a reputable VA divorce lawyer will help ease your mind.
What is Cryptocurrency?
Cryptocurrency is a new category of asset that is fast gaining acceptance in the United States and throughout the world. The most common types of virtual currency include Bitcoin, Ethereum, ADA, Avalanche, Solana, Litecoin, Tether, Polkadot, Dogecoin, XRP and more.
Cryptocurrency is a digital medium of exchange that is created and traded solely online using an encrypted ledger.
Each exchange or transfer is hidden and can be difficult to trace.
Cryptocurrency differs from the established concept of currency in the sense that it has no principal issuing authority or a regulatory body. While cryptocurrency has been around for about a decade, it gained serious attention around 2017 when Bitcoin reached a price of $20,000 each.
Bitcoin and Divorce
The confidential nature of Bitcoin and other cryptocurrencies can be a potential tool for persons intending to hide assets when filing for divorce in Virginia.
A dishonest spouse can buy Bitcoin for cash, store or transfer it without using a bank, and not leave a paper trail. This means its investigation might be needed in divorce litigation.
With the growing popularity of Bitcoin, lawyers everywhere are starting to handle high-value divorce cases involving disputes over these virtual assets. Lawyers and forensic accountants need to be aware of this new way of concealing wealth and look into the possibility that one spouse might be using cryptocurrency.
Is Using Cryptocurrency a Way of Concealing Assets?
Divorcing couples in Virginia are required to truthfully declare their assets and liabilities as part of the financial disclosure process.
However, with the purchase of Bitcoin and other digital currencies, one party can more easily hide money during a divorce. Without a paper trail, owning cryptocurrency can potentially lead to deception.
Even so, forensic accountants warn that using Bitcoin to hide wealth is not entirely fail-safe. Since every Bitcoin transaction is detailed in an encrypted ledger and linked to a public and private key, tracing back each transaction to an individual is possible.
Bitcoin transactions are securely kept in an online database known as the blockchain, an encrypted ledger that provides its user a complete history of all transactions ever made.
Depending on the expertise of an attorney and forensic accountant, transactions can be followed using this digital ledger and exposed as an asset during discovery.
Law firms have started making revisions on their forms to include requests for cryptocurrency. While court forms haven’t been included yet, divorce attorneys who handle various financial disputes can ask their clients to fill out a document detailing the income, assets, and debt of each spouse, with cryptocurrency listed under general assets.
If a party suspects their spouse has or may be using cryptocurrency, that party should inform their attorney about it early on in the process.
Get Help Filing for Divorce in Virginia
While many people and even lawyers generally stray away from cryptocurrency issues because the topic remains relatively unfamiliar, our legal team has the knowledge and resources to fight for your financial rights even when cryptocurrency is involved.
For more information on cryptocurrency in divorce cases, contact us today at (757) 656-1000 or send us an email.