Can you really hide assets in a divorce through Bitcoin? Cointelegraph investigates the feasibility of such a suggestion.
Traditional methods of hiding assets
In most cases, assets in divorce are hidden through relatively simple means with varying legality. That includes transferring money from joint accounts to private accounts; transferring assets to a friend prior to the divorce; undervaluing assets; or simply storing assets as cash in a hidden safety deposit box.
However, there are other more complex methods including overpaying the IRS, or other relevant tax agency, and then collecting the tax refund after the divorce proceedings. You can also try taking regular cash withdrawals on debit cards; defer promotions, raises or commission payments until after the divorce, or claim memory loss regarding employer retirement accounts or stock options.
If you are a business owner, things become a whole lot easier for you. For example, you can defer invoicing clients, create fake business expenses, or use ‘company’ assets to buy expensive goods like art and furniture, which you can then sell later.
Hiding assets through Bitcoin
Bitcoin would seem to provide the best of both worlds if you want to hide assets in a divorce, but firstly, it goes without saying that you must ensure Bitcoin is legal in your country before your start investigating.
It’s much easier to hold anonymously - all you need is the private key written in a hidden place, say the inner sole of your shoe, and you’re set.
In addition, the government and law industry is lagging behind terribly when it comes to an understanding of cryptocurrencies, so it would likely not even cross a solicitor or judge’s mind to consider looking for crypto-assets.
If you buy your Bitcoin in-person in cash, there would be no record or receipt that could tie you to the transaction, so following a paper trail would be impossible. Furthermore, liquidity after the divorce proceedings would be far more simple than trying to sell an expensive piece of art or furniture.
In the eventuality that your crypto-assets were discovered, a solicitor would have a very hard time tying you to the address, provided you showed due diligence, and although I couldn’t find a source on this, given that in most countries and in most US states, since Bitcoin’s value isn’t technically recognised, you could argue the case that they don’t have any value.
The only obvious downside to hiding assets through Bitcoin is the well-known volatility of its price. You could potentially lose huge sums if the market wasn’t in your favour, but on the other hand, you could get lucky, and even make a profit.
Consequences for hiding assets
Before you all go putting your life savings into Bitcoin and divorcing your significant others, at least acquaint yourself with the potential consequences.
In court, you will be deposed, meaning anything and everything you say in court will be under oath, and as such, lying about your assets will mean you will have committed perjury, a crime punishable by monetary fines or even a prison sentence, if you are discovered.
If you fail to report assets or provide financial information to your spouse after a court has ordered you to do so, you can be held in contempt of court, which can too mean jail time.
These are not hollow threats either. In 1999, after a woman failed to reveal the fact that she had won $1.3 million in the California state lottery just 11 days before she filed for divorce, a Los Angeles family court judge determined that she had violated state asset disclosure laws, acting out of fraud or malice, and as a result, all the winnings were awarded to her ex-husband. If she had declared it, each party would have received half of the $1.3 million.