Historically, aggrieved and divorcing partners attempting to hide assets during a divorce proceeding have tried to do so through shell companies or offshore bank accounts – and attempting such a hoodwink can result in contempt of court charges. But now secretive spouses willing to risk the wrath of the courts are leaning towards another loophole: Bitcoin and other decentralized “cryptocurrencies.
Cryptocurrencies have grown in popularity largely because of their decentralized nature: there is no central financial institution acting as a middleman, collecting transaction fees and imposing other account limitations. This lack of any sort of overseeing authority means that the court’s traditional methods of enforcing financial discoveries in a divorce case – injunctions, subpoenas and the like – have nowhere to be issued and are essentially meaningless.
“Where a party has not disclosed a crypto holding, there is no body to seek disclosure from, given the decentralization, meaning forensic experts will need to become involved to trace the crypto through seizure and searches of electronic devices,” says British lawyer Vandana Chitroda.
