Protect Your Assets – Talk To A Divorce Attorney To Avoid Being Ripped Off By Bitcoins Concealment
Bitcoins are defined as a cryptocurrency and are the first of their kind. Cryptocurrency is just a fancy term for “encryption” meaning only authorized parties can read it. This essentially allows individuals to store bitcoins without any link to themselves, drastically differing from bank accounts or stocks. Bitcoins, unlike traditional currencies like the US Dollar, aren’t backed by governments and aren’t influenced by monetary policy. This makes bitcoin more like gold than any other currency since its value rests entirely on how much people are willing to pay and how much its users believe in it. Bitcoins are traded from one personal ‘wallet’ to another. A wallet is a small personal database that you store on your computer drive, on your smartphone, on your tablet, or somewhere in the cloud.
Bitcoins came into existence in 2009 when creator Satoshi Nakamoto (which is presumed a pseudonym) launched the network as an “electronic peer-to-peer currency.” Since the introduction of bitcoins, several other crypto-currencies have emerged. Bitcoin is digital public money that is created by painstaking mathematical computations, and policed by millions of computer users called ‘miners’. The 3 major crypto-currencies are Bitcoin, Dogecoin and Litecoin. Bitcoins, while anonymous, are known for their volatile tendencies and can jump or drop in prices in just seconds. For example, in January-February of 2010, bitcoins were worth less than a penny. Just four years later, the value of a bitcoin jumped to nearly 1000 dollars.
Because of difficulty to track bitcoins, they’ve become the mainstay for illicit transactions, which include the Silk Road (recently shutdown), online drug and arms trades, and several other illegal transactions. In many countries, it isn’t yet clear whether bitcoin is a currency, a commodity, or another asset. These types of crypto-currencies are also troubling many countries, such as China. The reason they’re so bothersome is they allow individuals to move their currency out of the country very easily. Law enforcement and bankers see bitcoins as ‘gold nuggets in the wild wild west’, beyond the control of traditional police.
In a recent article published by CNBC, a London divorce attorney expressed her fears that this new type of digital, cryptocurrency could be a tool for many individuals to hide assets in a divorce. Hiding assets in a divorce is nothing novel. It is commonplace for divorce attorneys to deal with parties that attempt to avoid disclosing assets to keep them for themselves. People have been hiding money under rocks, stockpiling assets with friends or family members, and opening offshore bank and brokerage accounts. Bitcoin is perhaps the newest technology-based vehicle that could assist deceitful spouses circumvent equitable asset division in divorces.
Protecting The Divorce Estate From Bitcoins Concealment
So what do you do if you are a divorce lawyer and want to help protect your clients from possibly being ripped off by cryptocurrency bitcoins concealment? Of course, the first step is to start by adding a “digital currency” clause in your discovery and disclosure requests. At least you have asked the right question initially. Look at bank statements if you suspect an individual is buying bitcoins. Are there transfers to Mt. Gox (now defunk), Asia Nexgen (ANX), Bitstamp, Coinbase, Kracken, BTC-e and Cryptsy? Look for transactions with companies with “bit” or “coin” as part of their names. Also look at credit card charges to companies such as VirWox and CoinMama. Another approach to consider might be opening your own Bitcoin digital account and learn how it works first hand. You could establish a bitcoin wallet and link it to your bank account and transfer a few dollars at a time. Knowing this information personally could make your job of determining and protecting the “divorce estate” much easier down the road.
Bitcoin is now becoming much more mainstream since Overstock.com began accepting bitcoin in January of this year. Dell, Newegg and Dish network also accept bitcoin as well as thousands of other merchants. Sir Richard Branson, business magnate and the founder of the Virgin Group, is also a bitcoin proponent. You can even book a seat on the Virgin Galactic with bitcoin! ATM machines in Australia, Canada and other countries are being opened which trade in bitcoin.
The Changing World Of Bitcoins And Divorce
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Robert L. Mues
Robert Mues is the managing partner of Dayton, Ohio, law firm, Holzfaster, Cecil, McKnight & Mues, and has received the highest rating from the Martindale-Hubbell Peer Review for Ethical Standards and Legal Ability. Mr. Mues is also a founding member of the "International Academy of Attorneys for Divorce over 50" blog.