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Cryptocurrencies are becoming a thorny divorce issue

Many high-net-worth individuals in California and around the country have taken an interest in cryptocurrencies in recent years due to their surging values and the ease with which they can be transferred overseas. Alternative currencies like Bitcoin are also an increasingly thorny issue in divorce cases. This is because cryptocurrencies have become a popular way for divorcing spouses to hide their assets, and placing a value on these highly volatile holdings can be challenging even when they have not been concealed.

The ability to trace cryptocurrency assets is largely dependent on how they were acquired. Cryptocurrency purchased from online exchanges can often be found by examining bank statements or other financial records, but buying Bitcoins directly and then moving them offshore makes tracking extremely difficult. The kind of individuals who engage in this type of transaction tend to be careful, which makes tracing their assets even more challenging.

Figuring out how much Bitcoins or other cryptocurrencies are worth can also be difficult because the market for them is so volatile. Cryptocurrency assets purchased in late 2016 for $100,000 became worth more than $1 million in just a few weeks, but almost half of these gains had been lost by February 2018. In divorce cases, the values of fluctuating assets like stocks are generally set when court papers are first filed, but the extreme movement of cryptocurrency markets has led some legal experts to recommend waiting until assets are distributed to establish a value.

Hiding assets during a divorce can have serious consequences, and spouses who engage in this behavior could even be found in contempt of court and sent to jail. When their clients are convinced that assets are being concealed, experienced family law attorneys may call on experts like forensic accountants or investment specialists to scrutinize financial records and other documents for signs of malfeasance.

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