Syed Rahman assesses the warning that crypto is being hidden by some parties in divorce disputes.
A rise in crypto featuring in divorce proceedings has been accompanied by reports of some spouses hiding such assets from the other party.
Family lawyers have said that crypto is increasingly featuring among the assets that need to be divided up in divorces. But they have also stated that, in some cases, spouses are not declaring ownership of crypto assets in an attempt to prevent former partners trying to obtain a share of them.
As ownership of crypto becomes more common – with up to 12% of UK adults estimated by the Financial Conduct Authority to possess some – there is a growing likelihood of it featuring among the assets that are part of divorce proceedings; particularly if these involve a high net worth individual or business figure. This, however, can prove a problem, as crypto is easier to conceal than more traditional assets, such as money or physical possessions.
A person in divorce proceedings may be tempted by the thought that it would be easy to hide their crypto assets so their former partner cannot claim some or all of them. But they need to be aware that crypto has to be disclosed during divorce proceedings, in the same way as any other assets. The Matrimonial Causes Act 1973 states that the court has to consider the “income, earning capacity, property and other financial resources which each of the parties to the marriage has or is likely to have in the foreseeable future’’ when hearing divorce proceedings. Crypto clearly falls within the definition of property.
Trace
Anyone thinking of not disclosing their crypto assets while going through a divorce should also remember that while it is possible to conceal them, this does not necessarily mean they are untraceable. Transactions on the blockchain can be identified. Specialist help is available to both trace such assets and bring the necessary legal actions to have them made part of the divorce proceedings.
This can make the divorce a far lengthier and more complicated procedure than it otherwise would have been. It can also make it far costlier for the person who attempted to hide their crypto assets.
And it should not be forgotten that crypto assets (like any other assets) can be part of a pre-nuptial agreement to prevent any disputes if and when a relationship comes to an end. Although there may still be a need for forensic accounting if a spouse is unaware of any crypto assets obtained during the marriage or of any profits made on such assets in that time.
