Before divorcing couples in New Jersey can be sure that they are dividing marital property fairly and equitably, they must first know that the list of assets is complete. Hiding assets before and during a divorce proceeding is not a new phenomenon, but modern technology sometimes develops new avenues that spouses might use to stash away money.
Investors have been trading digital cryptocurrencies via online exchanges for over 10 years, according to Bankrate.com. However, after bitcoin entered the mass public awareness a few years ago, using cryptocurrency to hide cash may be growing in popularity among dishonest spouses.
Using cryptocurrency to hide assets
Cryptocurrency exists solely in the virtual world, operates outside of financial institutions and is largely unregulated by governments. Additionally, the blockchain technology used to trade digital currency relies on anonymously encrypted transactions that can be very difficult to trace. Since laws that could regulate the handling of cryptocurrency during divorce proceedings are not yet enacted, some will likely continue to believe that it is the perfect way to hide money from their partners.
Locating cryptocurrency among marital assets
The New York State Society of Certified Public Accountants outlines that even though tracing cryptocurrency activity can be tricky, it is not impossible. Some factors may determine if hidden cryptocurrency assets exist and help uncover the means to track them:
- Knowledgeability and fluency in current technologies
- Previous ownership or use of digital currency in personal or business practices
- Access to financial records and electronic devices
Issuing subpoenas are not always effective because there is no third party agent, and many digital exchanges are foreign-based. Still, tech-savvy forensic accountants can often find evidence of cryptocurrency transactions through the public blockchain or by examining tax returns, bank records and net worth statements.