And as crypto has become more mainstream, the courts are increasingly becoming more comfortable with dealing with issues regarding their full disclosure and valuation. So, just how much of a cat and mouse game is it to track them down?
Antonia Felix from Mishcon De Reya told Tatler, that due to its relative anonymity and freedom from internal regulations, crypto cases can be notoriously tricky particularly for a technologically savvy spouse. ‘Although cryptocurrencies should be disclosed as part of the divorce process in the same way as any other asset, it can be easier for a dishonest spouse to hide or dissipate these assets than is the case with more “conventional” transactions.’
Felix adds: ‘Following recent decisions in cases such as AA v Persons Unknown (and others) the family court in England and Wales regard crypto assets as “property” that can be the subject of orders for example, freezing injunctions or the transfer of ownership. That said, unless there is evidence of an initial investment, it can be practically difficult to prove that someone has an interest in cryptocurrency during a divorce.’
Of course, with an asset so volatile as crypto, the value can continuously fluctuate too. ‘It is vital that the court has up to date valuations at each hearing and at every stage of the negotiations. Another option is to use an average valuation over a chosen period,’ says Felix.
There’s also the issue of losing the key or indeed the wallet, a problem famously faced by British computer programmer James Howells who mistakenly put a hard drive with 7,500 bitcoins in the bin while clearing out his home in 2013, now said to be worth around £150m.
If a spouse suspects their partner is hiding crypto assets, it’s best to avoid playing detective and hacking into emails and accounts. ‘Everything needs to be done through a formal process in order to protect the client against claims which their spouse could bring against them for breach of privacy,’ says Hicks.
Hicks advises spouses to do their diligence, reviewing bank statements for the names of any cryptocurrency exchanges. ‘Ask for and check PayPal and Revolut accounts too. As with most assets, often a client will know more than they think about what their spouse invested in and it’s important therefore to ask them the right questions.’
Henry Hood, Senior Partner at Hunters Law Expert, suggests using asset tracers in some cases but warns ‘proportionality always needs to be considered – the cost of searching for crypto assets can be high, so whether this is worth it will depend on how confident the client is that the assets exist and their likely scale, especially if it is suspected that their format or location means it will be hard to enforce any orders against them.’
Hood adds: ‘If there is good evidence that the other party does or did have crypto assets and has not disclosed them, the court can be asked to make adverse inferences and award a greater proportion of the non-crypto assets to the other party.’
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