Ownership of Bitcoin and cryptocurrency has risen drastically since 2017. The semi-anonymous nature of cryptocurrency makes it a potential tool for spouses attempting to hide assets during the divorce process. There are many reasons why divorce attorneys should be losing sleep over this development. However, there is always a silver lining if you know where to look.
Threat: If a spouse refuses to pay a settlement or judgement, Bitcoin cannot be taken from their account without that spouse’s seed or private keys.
Silver Lining: A skilled forensic accountant or computer forensic analyst can help uncover, quantify, and value a spouse’s Bitcoin holdings. Assuming that spouse has other assets, attorneys can attempt to collect other assets that are within the reach of the court and the traditional financial system, such as bank accounts, property deeds, and other assets.
The above listed statements specifically apply to Bitcoin, the most popular cryptocurrency. Other cryptocurrencies may or may not have the same attributes.
Bitcoin and other cryptocurrencies create new issues that divorce attorneys should not ignore. Attorneys should discuss this risk with their clients and consider hiring a forensic accountant and/or a computer forensic expert early in the process of the divorce litigation.