Divorcing spouses using cryptocurrency to hide money
A cryptocurrency is a digital or virtual currency that is secured by cryptography. Cryptocurrencies rely on blockchain technology, which is effectively a digital ledger shared and verified across innumerable computers worldwide, which makes it nearly impossible to counterfeit or double-spend. This decentralized structure allows them to exist outside the control of governments and central authorities.
Divorce professionals are reporting that cryptocurrencies are fuelling a new trend of asset concealment when couples separate.
While offshore trusts and investments are well-known as tools used by the wealthy looking to hide assets, the increasing appeal of cryptocurrencies to even the smallest investor means concealment is likely to become much more commonplace. That’s because many individuals are attracted to the anonymity of crypto holdings, where trading can be virtually untraceable, despite the high volatility in the largely unregulated digital markets.
Despite cryptocurrency being a high-risk gamble, it has taken a relatively short time to become a fairly commonplace investment, as you don’t need any significant investment to get started, and unlike schemes such as offshore trusts it does not require specialists to set it up.
It can be hard to link crypto trading to an individual, so anyone going through a divorce should specifically name this in the request for assets to be declared if they believe their spouse may have holdings.
One route to identify digital currency holdings would be to request access to bank statements, to find transactions with a digital coin or wallet reference, as they are bought using a normal country-based currency, such as sterling. Cryptocurrency may also have been used to purchase material goods, which could link the physical asset to a name and address. Alternatively, tax returns may provide a paper trail to identify crypto holdings, as capital gains arising from the sale of cryptocurrency should be declared. If no other evidence can be found, then text messages or emails which mention it can be shown to the court.
However confident you are that assets are being shielded by a spouse, it’s important not to break the rule book in tracking them down by hacking into an ex’s email or bank account, whether or not you know the password, or whether your ex previously chose to share it with you. It is far better to highlight a failure to disclose assets, which can lead to serious penalties.
There are strong penalties for hacking emails or opening physical mail which can lead to a criminal conviction, as was highlighted in a recent divorce case for a high net-worth couple. Wealthy London banker Daniel Arbili was accused of hacking into his ex-wife’s email account during a bitter divorce battle, involving a portfolio of properties in France and Britain, luxury watches, an Aston Martin, and the family’s grade-II listed home in rural Essex.
When Mr Arbili claimed that new evidence showed his wife was richer than originally thought, using information supposedly obtained through a French enquiry agent, his ex-wife claimed that he could have only obtained the emails by hacking into her account, and the court refused to allow him to appeal the financial order which had already been agreed. Had Mr Arbili obtained evidence in a legitimate way that his ex-wife had failed to disclose assets then the outcome could have been quite different.
Going through a divorce of any scale means making decisions on how property, savings, pensions and other assets will be sorted out as well as what arrangements will need to be made for children. Our specialist family law solicitors have a wealth of experience and will offer you an honest appraisal of your circumstances in order to help you to make decisions to achieve the best outcome for you and your family.
If you have any questions or would like to speak with one of our family law experts, please use the live chat facility, call us on 01752 292201 or email info@wolferstans.com.