How Property Division in a Divorce Can Be Complicated By Bitcoin
By: M. Scott Gordon
Complex property division issues can arise in many different types of divorce cases in Chicago and Illinois in various kinds of family law situations. One new issue you might not have considered recently is Bitcoin and how Bitcoin can make divorce proceedings even more complicated.
When a portion of a couple’s marital assets is Bitcoin, it can be difficult to determine how to value the property and, in some cases, to classify it properly – either as separate or marital property. Given how “anonymous” Bitcoin and other cryptocurrencies are designed to be, Bitcoin can also be a way in which one spouse can hide assets that can be difficult to locate.
We want to provide you with more information about some of the various ways in which property division in a Chicago area divorce can be complicated by Bitcoin.
What is Bitcoin?
In order to understand how Bitcoin gets divided in a divorce and how complications can arise, it is essential to understand this question: what is Bitcoin?
According to an article in CNN Money, Bitcoin is a new type of currency. It was created in 2009 by an anonymous person and for the last 10 years, people have been purchasing Bitcoin and using it to make purchase on the Internet. If you own Bitcoin, you can use it to book travel on the Internet, to make consumer purchases and even to buy games for Playstation or Xbox. In 2017, according to the article, “the price of Bitcoin skyrocketed into the thousands.”
Why would someone use Bitcoin instead of a credit card or cash? Bitcoin is what is known as a “cryptocurrency.” This is a kind of digital currency that allows individuals to make purchases anonymously and to do so without a bank. As an article from Discover clarifies, cryptocurrency is like money in that both are “a medium of exchange.” However, Bitcoin and other forms of cryptocurrency are not physical forms of money – they are entirely digital. What makes Bitcoin a “cryptocurrency” is that it “uses cryptography to secure and verify transactions.” Accordingly, it is also decentralized since there is no central bank to issue the currency.
How Bitcoin Can Make a Divorce More Complicated
There are many reasons Bitcoin can lead to more complicated property division in a Chicago area divorce, including:
An article in Fortune explains, “although parties have a duty to provide full disclosure of their assets in a divorce, the anonymous nature of cryptocurrencies potentially make them a safe haven for spouses wishing to hide their money from a warring partner.” In situations where one party fails to disclose information about Bitcoin holdings, tracking down the assets can be extremely complicated.
Even if a spouse is not attempting to hide assets through Bitcoin, just valuing it can be markedly difficult. The value of Bitcoin “can fluctuate wildly within the course of a divorce,” the Fortune article notes.
Contact a Chicago Divorce Attorney
Do you have questions or concerns about Bitcoin and your divorce? A Chicago divorce attorney can speak with you. Contact Gordon & Perlut, LLC for more information.