The cryptocurrency bitcoin has been around for nine years. However, it's recently surged in value, and therefore, in popularity.
Bitcoin and other cryptocurrencies are ethereal and anonymous. They're bought and sold through the internet and don't belong to financial institutions. Bitcoin accounts don't have the owner's name on them, so it can be difficult to determine whether someone holds the digital currency and how much.
Naturally, this has become an increasingly popular way for spouses to conceal money from one another -- particularly if they're anticipating or going through a divorce. Spouses are required to fully and accurately disclose their assets in a divorce. However, bitcoin is "allegedly untraceable," according to the head of the American Academy of Matrimonial Lawyers.
As bitcoin and other cryptocurrencies have become popular means of hiding assets, family law attorneys have become increasingly concerned. However, entrepreneurs are creating software that can track transactions using bitcoin, and forensic accountants can use their skills to find bitcoin accounts.
For those considering hiding assets using bitcoin, it's important to remember that any statements you make verbally or in writing about your assets, liabilities and net worth are often considered sworn testimony. The penalties for lying or withholding information can be serious -- legally and financially. As one attorney notes, a person hiding money in cryptocurrency would probably end up "in a position that would likely compel them to misrepresent themselves before a judge."
If the hidden assets are discovered after the divorce, the other spouse can re-open the negotiations for property division and spousal support.
If you are considering divorce or believe your spouse is, it's essential to do some homework and determine what assets both of you have so. That way, you're more likely to notice if money starts disappearing or if your spouse starts making unusual transactions. If you suspect that your spouse is hiding assets, whether through bitcoin or any other method, your Rhode Island family law attorney will likely recommend calling in a forensic accountant.
Source: Bloomberg, "Bitcoin the New Mattress Full of Cash for Divorce Cheats," David McAfee, Dec. 28, 2017