Vandana Chitroda and Mark Philips, family law partners at Royds Withy King, said the firm is currently dealing with several divorce cases involving cryptocurrencies.
They said, in a post on the firm’s wesbite, the rapid rise of cryptocurrency since its creation in 2009 and the wealth it has generated, means digital currencies are likely to become a “frequent and significant feature” in modern day divorces.
Hiding wealth
While couples have a duty to provide full and frank disclosure during a divorce, they said it is not unheard of for some parties to attempt to hide their assets from their respective spouses, and cryptocurrencies may make this process easier.
“Advisers need to understand the implications of cryptocurrencies on any divorce settlement and have the network of specialist advisers to ensure that they are traced and valued correctly,” Chitroda said.
Tracing cryptocurrency
The very nature of cryptocurrencies means it can be hard to trace, however it is not impossible, the partners said.
One example they give is if a spouse can prove that large amounts of money have been transferred through a cryptocurrency exchange.
“Tracing cryptocurrencies could be enormously time-consuming and expensive,” Philips said
“This is, of course, much easier if cryptocurrencies are traded via an online investment platform and bought with funds from a bank account, as the original value of the transaction can then be established,” he said.
Forensic analysts
Digital forensic analysts can be used by a spouse to identify trace points and give weight to a claim. However, this can be expensive, especially in relation to something like Bitcoin that has a fluid value, they said.
If a divorce case does end up in court, a judge, even without concrete evidence of cryptocurrency assets, could make inferences as to their existence and factor their potential value into their final judgement.
