A number of media reports in recent days suggest that Bitcoin and other cryptocurrencies may pose problems for couples embroiled in bitter divorce battles in instances where one party is attempting to hide the true extent of their wealth from the other.
In England and Wales, Courts have several powers which enable them to investigate undisclosed assets in instances where it is believed that one party is trying to hide their wealth.
In some instances, the Courts even have the power to ‘freeze’ an individual’s assets as divorce proceedings run their course, as recently seen in the case of Russian billionaire Farkhad Akhmedov, whose assets were frozen during a legal battle against his ex-wife, Ms Tatiana Akhmedova, after it emerged that the wealthy businessman had attempted to hide a secret art collection thought to be worth millions of pounds.
But in recent days, a number of cases have emerged involving individuals who have used cryptocurrencies such as Bitcoin in an attempt to hide their wealth.
This poses a significant problem for the Courts, which have no powers to ‘freeze’ Bitcoin, as this volatile cryptocurrency is currently not regulated in the same way as a bank account. On top of this, cryptocurrency cannot be ‘tracked down’ and frozen as easily as physical assets such as expensive cars, houses, or art collections.
Bitcoin assets are also incredibly difficult to value, due to the volatile nature of the cryptocurrency, it has been warned.
Recent reports suggest that the only real option available if one party involved in a dispute is trying to hide their assets in this way is to appoint a forensic accountant or digital expert to analyse the relevant data.
However, due to the relatively new nature of Bitcoin and the fact that the cryptocurrency has not yet been involved in many divorce or related financial disputes, the effectiveness of this approach remains yet to be seen.
Furthermore, recent Court hearings have revealed that Courts in England and Wales currently do not have any specific guidance on cryptocurrency and its place in certain disputes.
MFG Solicitors’ family team can advise on divorce, separation and all other aspects of family law. For more information about how we could help you, please contact us.