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Using cryptocurrency to hide assets

| Apr 26, 2019 | Family Law |

Cryptocurrency and digital currencies have been around since 2009. While Bitcoin is the most well-known, there are now thousands of these digital currencies, including Etherium, XRP (Ripple) and Litecoin. Essentially cash stored in a digital format, these assets can pose a real challenge to couples simply attempting to divide assets because they are easy to hide and hard to value.

There are thorny legal issues involved in using these currencies. Some countries like the United States allow the use of cryptocurrency, while others do not. Even here in the United States, cryptocurrency is not legal tender, and there are still many legal questions that are unanswered.

A temptation to hide assets

It is common for clients to worry that spouses are hiding assets. This is sometimes true, and it may be necessary for an attorney to work with a digital forensic expert to determine if the other side is being honest, often looking for evidence of transactions using exchanges like Kraken, Gemini, Coinbase or Bittrex.

Other clues can be found by examining paperwork for references to cryptocurrency (look for strings of alphanumeric characters) as well as flash-drives, external hard drives or offline backup tools like Cryptosteel, which safely stores private keys, wallet recovery seeds and passwords.

It may be tempting for a tech-savvy spouse to try using digital currency or utilizing some form of technology to hide assets. However, the courts and an experienced Board-Certified Family Law expert who works in Collin County, Dallas County, Denton County, or elsewhere in Texas can often effectively hold these unscrupulous spouses accountable for their actions when the asset is in a digital format or some other unusual medium.

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