Law firms are reporting an increase in divorce cases involving cryptocurrencies.
The most common type is Bitcoin, having found its way into the news recently due to a mammoth increase in value. Other currency examples include Litecoin, Ripple and Ethereum.
Cryptocurrencies are largely unregulated around the world, existing in something of a grey area. Both parties in financial proceedings on divorce are under an on-going duty of full and frank disclosure. It could therefore be more difficult for lawyers and Courts to obtain the type of disclosure that is necessary in such proceedings.
Valuing cryptocurrencies is not as straightforward as valuing your ordinary shares and investments. It is likely that there will have to be valuations made at each step of the proceedings. A value will then need to be agreed on the date of the final hearing.
When such currencies are traded using an online exchange or bought with funds from a bank account, they can be easier to trace and value. However, if a cryptocurrency is moved offline, for example, if someone transfers their digital wallet onto a USB, then it becomes more problematic. In such a case, it is likely that a digital forensics expert will need to be instructed, which could be costly and time consuming.
“It is likely that cryptocurrencies will be a more regular feature in a large number of divorces” says partner Sally Robinson. “Whilst it is acknowledged that such cryptocurrencies are capricious, they are not going to go away. It is therefore extremely important that on separation, if one party suspects that their spouse has an interest in such a currency that they report this to their lawyer as part of the disclosure process, so the right questions and checks can be put in place to ensure all relevant information is produced”.
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