Many people going through a divorce wonder whether they should be worried about whether their spouses are hiding assets and wealth in the form of cryptocurrency. In Utah, earned income of each spouse earned during the marriage is marital property. If you or your spouse starting mining cryptocurrency during the marriage, those assets are marital assets. If you or your spouse purchased cryptocurrency or if existing cryptocurrency acquired during the marriage increased in value, those too are marital assets.
Is cryptocurrency an easier way to hide assets than the ways that existed before the invention of cryptocurrency? Not really. Hiding an asset really comes down to concealing its acquisition and existence or getting your or at least the court to believe that the asset no longer exists. People have been hiding assets in divorce forever. Siphoning off small amounts of money over time that can be explained away and then depositing the funds in secret bank accounts or hiding them in a coffee can. Cooking the books at work (if one is self-employed) to report less income than one really earns, working side jobs and never informing one’s spouse or the government of the income, etc. Whether one gets away with hiding assets depends upon how well one hides those assets. Cryptocurrency itself is essentially no easier to hide than cash, it’s just a new kind of asset. Just because it’s digital doesn’t make its existence easier to deny or hide. But if your spouse is hiding cryptocurrency and isn’t doing a very good job of it, here are some ways you may discover it:
- Review bank and other financial institution statements.
While it is possible to acquire cryptocurrency by means other than buying it with cash, purchasing with cash is the most common way. So if your spouse was foolish enough to purchase cryptocurrency with a credit or debit card or online, those means of purchasing may leave a trace in your spouse’s bank, credit card, or other financial account statements by identifying the transaction, the seller, and/or what was purchased.
- Check your spouse’s computers, phone, and other digital information storage devices.
Cryptocurrency is stored digitally, and that requires a digital storage device. Computers, smartphones, and tablets have hard drives, which are digital information storage devices. And don’t forget thumb drives (USB storage) and the cloud. Cryptocurrency is identified by a “key” (also known as a “private key”), and a key is string of characters used to spend and exchange different cryptocurrencies. Multiple keys are stored in a digital “wallet”. Buying, selling, and trading cryptocurrency is conducted on cryptocurrency exchanges. These exchanges are accessed through apps. Your spouse may also receive e-mail messages from his/her cryptocurrency wallet provider or from people and entities your spouse deals when buying and exchanging cryptocurrency. So you may want to explore your spouse’s computers, smartphones, tablets, and storage devices/services to hunt for wallets and keys and for cryptocurrency exchange apps. Caution: there are state and federal privacy and wiretapping laws, so whether you can snoop around without an attorney’s help or a court order is a question you want to ask and have answered before you start your search.
- Unaccounted for online purchases, online sales and other online transactions.
While most cryptocurrency these days is purchased with real money first, that’s not the only way to obtain it. And one way to hide cryptocurrency is to hide the means by which it was obtained. One way to do that is by accepting cryptocurrency in exchange for selling something. That way, your spouse receives cryptocurrency without having left any record of purchasing it. And the account that receives the cryptocurrency need not be a bank account, which makes it easier to hide both the account and to move the cryptocurrency around without it showing on any of your spouse’s bank statements.
- Loan and credit applications and tax returns.
Your spouse may feel OK lying to you about his/her cryptocurrency holdings, but may not feel so comfortable lying to the government. So check your spouse’s personal and business tax returns to see if your spouse reports cryptocurrency there. And your spouse may have wanted to appear more flush by identifying his/her cryptocurrency holdings to potential creditors on loan and credit applications.
Utah Family Law, LC | divorceutah.com | 801-466-9277