Cryptocurrency has become an increasingly prevalent asset in California and has a variety of impacts, including during divorce. In a high-asset divorce, the stakes can be especially high, with millions of dollars potentially on the line. Investments in cryptocurrency can present a unique challenge during the assessment and separation portions of a divorce.
The basics about cryptocurrency
Cryptocurrency is a digital asset that is traded much like stocks and has a fluctuating financial value. Trading cryptocurrency is slightly different than most other forms of funding mainly because it is unregulated, difficult to trace and requires tying funds up in digital purchases. The untraceable transactions can cause difficulties with the forensic accounting necessary during the divorce.
Cryptocurrency in divorce disputes
Cryptocurrency has become an en-vogue way of trying to hide wealth, so divorcing parties have begun to take advantage of crypto. While the parties in a divorce often attempt to hide or minimize their assets during the proceedings, a forensic accountant can trace that the funds were invested into cryptocurrency and when even if they cannot find the transactions after investment.
Avoiding splitting joint assets by “hiding” the currency value inside the Crypto network can cause extra-legal problems, especially if the investment was made after the divorce papers were filed. Doing so may cost the spouse who invested the funds even more in the settlement, especially if the crypto is cashed out at a lower value than invested.
During a divorce, few things cause more disputes than financial assets, including cryptocurrency investment. Attempts to hide financial assets in crypto can be detrimental to the investor’s case. If you have a cryptocurrency and are in the process of divorce, consulting your lawyer about how to proceed may be necessary.