Cryptocurrencies can pose significant challenges in divorce proceedings

| Nov 22, 2019 | Divorce |

Divorce can be difficult and when cryptocurrency gets thrown into the mix, it can complicate the process even more. Separated couples who have invested in these types of currencies, including Bitcoin, Ethereum and Litecoin, can pose a new set of challenges in the separation process.

Digital currencies can foster distrust

During divorce proceedings, the currency’s anonymous nature can make it easier for one partner to hide their assets away from the other. Unfortunately, this can fuel distrust between them, especially if they are already in a heated battle over asset division.

When cryptocurrency gets digitally exchanged or purchased through bank account funds, it can be easier to trace and determine its value. However, if it’s transferred offline onto a flash drive, this move can make it difficult to follow. If the other spouse goes looking for the hidden assets, they may have to hire a digital forensics expert to scavenge through the other spouse’s computer to learn what transactions took place. However, this service could cost more than the value of the currency may be worth.

Potential risk of volatility

Digital currencies are not backed by a government, which can cause their value to shift drastically, making them unstable. In December of 2017, Bitcoin reached a high of around $20,000 and within two months, dropped down to $6000. As many divorces often take approximately 6-12 months to finalize, its value can fluctuate dramatically within that period.

New obstacles ahead

Cryptocurrencies have changed the landscape of many divorce cases, as both judges and lawyers are starting to see these types of cases come through the court system.

Colorado couples looking to file for divorce may want to contact a knowledgeable family law attorney. They can help guide couples through the complexities of asset division and other challenges faced during divorce proceedings.