Divorced spouses use cryptocurrency to cover cash. As consultants discover it
The dramatic rise in cryptocurrency has resulted in some spouses hiding these digital assets during divorce settlements, and tracking down the funds is not easy, experts say.
More than 20 million Americans could own cryptocurrencies, industry groups say, and the market value of digital currencies rose to a record $ 2 trillion in April. These spikes could entice more spouses in divorce proceedings or those contemplating divorce to hide their stash, experts say.
“I’m sure it was an issue all along,” says Sandra Radna, a divorce lawyer from Long Island, New York. “The notoriety of divorce lawyers is very new.”
This is how experts track down a spouse’s hidden funds.
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“The hardest part for lawyers is to first determine if an investment has been made,” says Radna. “And then, if you have that suspicion, go after him.”
While some spouses in a divorce may know about cryptocurrency from previous conversations, others may suspect funds hidden due to their spouse’s lifestyle changes, she said.
For example, their spouse may suddenly have a lot of extra money, or they may make a big purchase, such as an expensive new car.
If a spouse believes there could be significant amounts of hidden cryptocurrency, an attorney can file a subpoena or court order to gain access to their spouse’s computers or electronic devices, Radna says.
There are several ways to find secret cryptocurrency accounts.
Forensic experts can search electronically stored information for symbols for digital currency tickers or search devices for credentials.
You can also look for confirmation emails from exchanges or transfer activity on bank statements. There may even be records of cryptocurrency income on previous tax returns.
A spouse may also have listed cryptocurrencies in previous loan applications to increase their chances of getting approval, Radna said.
Difficult to follow
While older cryptocurrencies like Bitcoin or Ethereum may be easier to track, others may be more difficult for experts to find.
Monero, Dash, Zcash, PIVX, Verge, Horizen and Grinsen, for example, are some of the most anonymous cryptocurrencies, Radna said.
We’re looking for people who have made a lot of money to make the investigation worthwhile.
Other challenges can arise when dealing with overseas cryptocurrency exchanges.
While attorneys can subpoena US-based exchanges, obtaining records from overseas companies can be difficult, said Chicago-based divorce attorney Patrick Markey.
Expensive to pursue
Of course, spouses need to weigh the costs before embarking on a cryptocurrency hunt. Before starting, a spouse can do an analysis to gauge how much money they might want to track down.
“We’re looking for people who have made a lot of money to be worth investigating,” said Radna.
Forensic experts typically charge hourly and can be costly depending on the number of electronic devices and the volume of information, she said.
In addition, the divorce attorney must spend extra time reviewing what forensic experts are finding in order to bring a legal argument to the court.
“If it’s $ 5,000 [of cryptocurrency]”It’s really not worth it,” she said.
The spouse with less money should plan something before the divorce, Radna said. You can start by gathering information and calculating the marital assets.
“When you start putting this together, you will likely see holes,” she said.
The spouse can check shared accounts to see if there is any lack of funds, and if the spouse knows that a particular cryptocurrency account exists, their attorney can request access.
“It’s really about getting as much information as you can about how to buy it,” said Markey.
Lack of money can indicate a gambling problem, offshore bank accounts, an extramarital affair, another family, or a cryptocurrency, Radna said.
“And once you have an idea of what is missing or what may have been invested, your lawyer can do the rest of the work,” she added.