Bitcoin Divorce: How Cryptocurrency Is Being Used By The Wealthy To Hide Its True Value

And as crypto has become more mainstream, courts are becoming increasingly comfortable dealing with questions regarding their full disclosure and valuation. So, how much of a cat-and-mouse game is it to track them down?

Antonia Felix from Mishcon De Reya told Tatler, that because of their relative anonymity and freedom from internal rules, crypto affairs can be notoriously difficult, especially for a tech-savvy spouse. “Although cryptocurrencies should be disclosed as part of the divorce process in the same way as any other assets, it may be easier for a dishonest spouse to hide or disappear these assets than is the case with more ‘conventional’ transactions.

Felix adds: “Following recent decisions in cases such as AA v Persons Unknown (and others), the Family Court in England and Wales considers crypto-assets to be ‘property’ which can be subject to orders, such as freezing injunctions or transfer of ownership. That said, unless there is proof of an initial investment, it can be practically difficult to prove that someone has an interest in cryptocurrency during a divorce.’

Of course, with an asset as volatile as crypto, its value can also fluctuate continuously. “It is important that the court has updated valuations at each hearing and at all stages of the negotiations. Another option is to use an average valuation over a selected period, says Felix.

There is also the issue of losing your key or indeed your wallet, a problem known to British computer programmer James Howells who mistakenly left a hard drive containing 7,500 bitcoins in the bin while cleaning out his home in 2013, now said to be worth around £150m.

If a spouse suspects that their partner is hiding crypto assets, it is best to avoid playing detective and hacking into emails and accounts. “Everything has to be done through a formal process to protect the client from claims that the spouse may bring against them for privacy violations,” says Hicks.

Hicks advises spouses to do their due diligence by reviewing bank statements for names of any cryptocurrency exchanges. “Request and verify PayPal and Revolut accounts as well. As with most assets, often a client will know more than they think about what their spouse invested in, so it’s important to ask them the right questions.’

Henry Hood, senior partner at Hunters Law Expert, suggests using asset trackers in some cases, but warns that proportionality must always be considered – the cost of searching for crypto assets can be high, so whether this is worthwhile will depend on how confident the client is that the assets exist and their likely extent, particularly if it is suspected that their format or location means that it will be difficult to enforce any order against them.

Hood adds: “If there is good evidence that the other party has or had crypto assets and has not disclosed them, the court may be asked to make adverse inferences and award a larger share of the non-crypto assets to the other party. ‘

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