In marriages in which one spouse is the primary breadwinner, divorce can represent a large decrease in assets and income for the higher earner. Concealment of assets is therefore a problem as old as divorce itself, and it rears its head in many forms.
Today, unscrupulous spouses may be employing a new, high-tech innovation to do so: electronic currencies like Bitcoin.
Bitcoin is the best-known of a class of computer-generated currencies invented within the past several years. These crypto-currencies may be used to purchase practically any good or service.
They began as a concept of interest mainly to computer scientists, but soon, they began to attract wider attention for their clandestine properties. All Bitcoin transactions are recorded on a public ledger viewable by anyone, but the parties to those transactions are anonymous “addresses” – strings of letters and numbers akin, perhaps, to a Swiss bank account. Bitcoin rivals or surpasses cash in terms of its anonymity of ownership, ease of transfer and simplicity of concealment.
While there are few, if any, currently documented cases of Bitcoin or other electronic currencies used to conceal assets in divorce, there is little doubt that the option will become attractive to those desperate enough to break the law in the pursuit of financial gain.
Bitcoins are often purchased online by wire transfer or electronic bank transfer. This method is also employed by those with nothing to hide, but it could present significant obstacles to asset discovery for those who desire it. Bitcoins can also be purchased in person with cash — potentially leaving no paper trail whatsoever.
If it is easy to conceal the actual purchase of bitcoins, concealment of ownership is even easier. The use of the currency depends on a long password, called a “key.” Bitcoin keys are easily stored on USB flash drives, memory cards or paper printouts, then hidden anywhere. They may even be memorized, leaving absolutely no physical evidence.
The transfer of bitcoins is a trivial task involving a few keystrokes and a tiny transaction fee. A divorcing spouse could have a trusted friend or relative hold on to the currency in his or her own accounts.
The problem of uncovering assets in an adversarial divorce is a very old one. Electronic currency may be the latest method available to cheating spouses, but it will not be the last. Parties to divorce, family law attorneys and judges all need to be vigilant in ensuring a fair and lawful outcome in every divorce case.