Bitcoin hiding assets
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Use of Bitcoin is technically not illegal but a judge will punish an individual if he believes the spouse is using it to hide their money. Overall Marks said the use of technology in a divorce proceeding has both positive and negative aspects. If someone uses technology to prove their spouse is capable of working, when they indicated they could not, the court could look at that in a positive manner as long as nothing was done illegally.
On the flip side, if one uses technology to embarrass their spouse, the court will wonder if this was done to punish the husband or wife or is it really in the best interests of the family. The court will always put the interests of the children first.
If secret recordings are used to the overall detriment of the asset pool and negatively impact the children, the court will not look at it positively. Skip to primary navigation Skip to main content Skip to primary sidebar Skip to footer Loading, please wait. In: eFinance By ThrottleNet. Using New Technology to Hide Assets During Divorce Now technology has made it easier to hide large amounts of cash through new electronic currencies like Bitcoin. Legality of Hiding Funds in BitCoin Use of Bitcoin is technically not illegal but a judge will punish an individual if he believes the spouse is using it to hide their money.
Bitcoin in Divorce: Undisclosed Cryptocurrency. To connect with Dror: There are a bunch of matters that ought or need to be determined as part of the investigation including:. Here at the Law Offices of Peter Bronzino, we know how complicated the process can be. Also, the names of the sender and recipient are not identified in transactions. Investment Fraud. Property acquired before marriage or by gift, device, or decent is considered separate property.
More information is available by contacting The Marks Law Firm at Watch part 3 of our interview with Jonathan below! Comments are closed for this post, but if you have spotted an error or have additional info that you think should be in this post, feel free to contact us.
Identifying Cryptocurrency in a Divorce
All rights reserved. Difficulties tracing virtual currency and the relative newness of laws surrounding it make knowing how to handle digital money in divorce vital to protecting what is rightfully yours. As long as the data encryption used is safe, the digital currency is safe. Cryptocurrency gets rid of the middleman required for traditional financial transactions. Instead, blockchain technology handles the transactions — allowing information to be distributed, but never copied.
Repercussions of attempting to Hide Funds via Cryptocurrency
There is no central database. Information is simply updated on multiple locations in real-time.
This key serves as your record of ownership. Your money can then just sit in your digital wallet as an investment, or you can transfer it to others or buy goods or services from places that accept virtual currency. Similar to a credit card, everything is done electronically. But cryptocurrency functions more like paper money. There are little to no transaction fees, and no identifying information like names or addresses associated with transactions.
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Whoever has the key controls the funds in the digital wallet. If you lose the key, you lose access to the money. Most people will print out their key, save it in the cloud, store it in a digital wallet app, use cryptocurrency software, or keep it on an external hardware wallet. When most people think of cryptocurrency, they think of Bitcoin. Made available for public use in , Bitcoin was the first official digital currency. You can buy Bitcoin with a credit card on internet exchanges like SpectroCoin or Indacoin.
You can also set up your business to accept Bitcoin as a form of currency, exchange cash or other items of value for keys to Bitcoin wallets, or buy and sell Bitcoin on trading exchanges like Kraken, Gemini, or Coinbase. But Bitcoin is far from the only type of cryptocurrency. In fact, there are hundreds of different altcoins.
Bitcoin Assets and Divorce Attorney Monmouth and Ocean County NJ
Given the success of Bitcoin, developers continue to create new forms of digital cash. In New York divorce, cryptocurrencies are handled just like any other asset. If crypto assets are present and shown to be marital property, each party will get their fair share in the divorce settlement.
The problem is knowing whether any crypto assets exist. At our Manhattan divorce firm, we see both sides of the fence — from spouses who suspect the other is hiding virtual cash to parties claiming their cryptocurrency is not part of the marital property. Proving either case can require the participation of expert forensic accountants who have a deep understanding of cryptocurrency assets, virtual wallets, and transaction dynamics.
The court needs to understand this, and it takes a forensic crypto expert to establish what really happened. Hiding digital currency during divorce is as illegal as hiding bank accounts. Transactions with crypto exchanges like Coinbase, Kraken, Polinex, Bittrex, and Gemini often show up on bank statements. This proves the spouse who controls that bank account has some virtual currency somewhere and can be grounds for requesting cooperation from the exchange to view account records and transaction history. It is also possible to subpoena exchange records, though it can be more difficult to secure records from exchanged based outside the U.
Tax return forms are another source of information that can identify crypto assets. Cryptocurrency transactions must be reported in tax returns as either capital gain or loss. The same is true of Net Worth Statements. You may also be able to find out when a transaction occurred and how much crypto was involved.
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New York City forensic accountant Mark DiMichael recommends searching the marital property for printed crypto keys. But remember, this must happen during the divorce discovery process. If your spouse uses cryptocurrency as part of their business, try to recall how your spouse stores and transacts in cryptocurrency. Where do they keep their important records? Do clients have access to those records? What electronic devices does the spouse own?
Aside from enlisting an experienced divorce attorney with a powerful team of seasoned crypto investigators, it is useful to stay up to date with crypto developments. Once the discovery process determines cryptocurrency assets are present, the question becomes, are those assets marital or separate property?
If marital, they will factor into the divorce settlement. New York is an equitable distribution state, meaning any digital currency acquired or accumulated during the marriage will be split between spouses according to their individual contribution. If the crypto was acquired, inherited, or received as a gift before marriage, it may be considered separate property and not subject to division in divorce. In other words, it all comes down to when your spouse acquired the digital assets — and this seemingly simple piece of information can be extremely difficult to uncover with untraceable crypto transactions.
Seven years later, Nick is married and has a son. He liquidates his crypto and is now a Bitcoin millionaire. With the new Bitcoin millions, she wants Nick to buy the biggest, most luxurious New York home they can afford. Nick disagrees.
How cryptocurrency assets are becoming a new battleground in divorce disputes
Had Nick held onto the Bitcoin he bought before the wedding, it would have been separate property and not subject to split in the divorce settlement. But because Nick liquidated his Bitcoin and purchased a house during the marriage, Mary stands to collect millions. Here, if he could prove that he purchased the Bitcoin before marriage, he could keep it all. He bought much of it via direct messaging members on Bitcointalk.
CoinDesk Investigates: Can Divorcees Hide Assets in Bitcoins?
No records or receipts existed to prove when he bought it. Had he kept records of his transactions, he would have had potential proof of purchase before marriage. If a court finds negligence, you could end up paying your ex half of the lost crypto value out of pocket. Uninformed laypersons often assume if you own crypto, you can access it.