Hidden assets are often a concern in many divorce cases. In past generations, a spouse may have hidden assets by stashing cash in a safety deposit box of which his or her partner was unaware or by opening a side account in a separate bank. With the advent of the digital age, however, came a new method that person could use to hide marital assets: the digital currency known as Bitcoin.
What Is Bitcoin?
While you may have heard of Bitcoin and other digital currencies, many are unfamiliar with how they work. Bitcoin, essentially, is a network that allows individuals to send payments to each other electronically. The payment units are called “Bitcoins,” and they are not a physical currency sponsored by any particular state or government. Instead, they are the product of a very complex algorithm that is encrypted to control the generation of the currency and to verify the transfer of funds.
Bitcoin may be particularly attractive to a spouse looking to hide assets because the currency is not regulated by a central bank or governing body. Each user stores their generated or purchased Bitcoins in a digital account commonly referred to as a “wallet.” All access to a person’s Bitcoin goes through this wallet.
Theoretically, a person could hide assets in the form of Bitcoin by maintaining his or her wallet on a device—a computer or smartphone that his or her spouse cannot access. In addition, an individual can purchase units of Bitcoin in cash without generating any paper records. The only way to trace or uncover assets hidden in this way is to identify and access the individual’s wallet—a rather difficult task, n most cases.
Contrary to popular belief, however, Bitcoin is not completely anonymous. All digital currencies rely on a technology called “blockchain.” This is a common ledger shared by all users and is necessary for a digital currency to work. The shared ledger means that every Bitcoin owner has an electronic copy of every Bitcoin transaction that has been completed. If you are able to determine which wallet is your spouse’s, you would be able to find every transaction he or she has made with that wallet and any others that he or she may have.
Hidden Assets In Divorce
Using Bitcoin to hide assets is a risky proposition, as it is an emerging and unregulated technology. The value of purchased Bitcoin can fluctuate dramatically, making it more financially dangerous than most other types of investments. In addition, the rise of Bitcoin’s popularity has spawned several copycat currencies that are even more unstable, with some bordering on completely fraudulent.
Financial risk notwithstanding, hiding assets during a divorce using Bitcoin or any other method is also illegal. Each spouse is obligated to make a full disclosure of all of their assets in a divorce proceeding, and if either party attempts to conceal or hide assets, the court may order the guilty spouse to forfeit some or all of the hidden assets as a result.
If you have any reason to believe your spouse is hiding assets, contact an experienced Kane County divorce attorney right away. Schedule your free consultation today by contacting a member of the team at Bochte, Kuzniar & Navigato, P.C.