An urban legend says that Native Americans traded the island of Manhattan for a mere $20 worth of beads and trinkets. The truth is very different, but one thing is true: the colonial settlers definitely got the better end of that deal. On a smaller scale, a divorce can turn out in a similar way, with one party getting the short end of the proverbial stick. This is why it is important that a fair property division settlement be reached prior to the divorce being finalized.
One key hurdle for divorcing spouses to overcome when negotiating a property settlement is the uncertainty of financial disclosures. It has always been difficult to determine if all assets – and debts – had been disclosed by both parties. That job once involved tracing bank, stock and retirement accounts as well as payroll information. It’s now harder, though, now that alternative, intangible payment methods like credit cards and electronic “Bitcoins” are popular.
Some legal and financial experts worry that Bitcoin currency could easily be used to shield assets from disclosure during a divorce, particularly given the ease at which Bitcoins can be transferred from one user’s online “wallet” to another. This opens us a new gateway to hide assets in the accounts of friends, family or even legitimate businesses owned by one spouse.
Courts have already started bracing for the possibility of hidden electronic assets. In late 2013, a judge presiding over a trademark infringement case filed in a federal court in the Eastern District of California mandated that financial disclosures include not only tangible assets as well as those in digital currency accounts like Bitcoins. It stands to reason that state and federal courts across the country will soon follow suit in cases where transparent asset disclosure is necessary.
Source: CNBC, “Bitcoin could be used to hide assets in divorces, warn lawyers,” Jane Croft, June 3, 2014.