Complexities often arise in divorce cases, especially when it comes to the division of assets. With the rise of cryptocurrency, a new challenge has emerged in the form of potentially hidden assets. In this article we’re taking a look at the use of cryptocurrency to hide assets in divorce proceedings, specifically focusing on the implications in the state of New Hampshire. We will discuss the pros and cons of such actions and examine the legal considerations surrounding them.
Cryptocurrency, such as Bitcoin, Ethereum, or Litecoin, has gained popularity due to its decentralized nature and the perceived anonymity it offers. Individuals going through a divorce may attempt to use cryptocurrency as a means to hide assets from their spouse and the legal system. This can be achieved through various methods, including:
- Cryptocurrency Exchanges: By transferring marital assets into cryptocurrency, a party may attempt to obscure the funds’ origins, making it challenging to trace and allocate them during the divorce process.
- Offshore Wallets and Anonymity: Cryptocurrency wallets located in jurisdictions with strong privacy protections may provide an avenue for individuals to hide assets from scrutiny. These wallets can offer a level of anonymity that traditional financial accounts do not provide.
The Ins and Outs of Hiding Assets with Cryptocurrency
While individuals may see potential advantages in using cryptocurrency to hide assets, it is crucial to consider the associated risks, as well as the legal implications involved.
Reasons Why People Try It:
- Anonymity: Cryptocurrency transactions can provide a certain level of anonymity, making it difficult for the other party and legal authorities to trace and identify the hidden assets.
- No Central Authority: Cryptocurrency operates on a decentralized network, which means there is no central authority governing transactions. This lack of oversight can make it more challenging for legal systems to detect hidden assets.
Reasons Why We Strongly Advise Against:
- Legal Consequences: Hiding assets, including cryptocurrency, during divorce proceedings is fraudulent and may lead to severe legal consequences. Courts take a dim view of attempts to conceal assets, and individuals caught doing so may face penalties, including financial sanctions and potential criminal charges.
- Traceability Challenges: While cryptocurrencies provide a degree of anonymity, transactions are recorded on a public ledger called the blockchain. With appropriate expertise and tools, forensic analysis can uncover hidden cryptocurrency assets, making it challenging to hide them indefinitely.
The Legal Landscape in New Hampshire: In New Hampshire, divorce laws and asset division principles are guided by equitable distribution. This means that marital assets, including cryptocurrency, are divided fairly but not necessarily equally between spouses. All assets must be disclosed to the other spouse, regardless of how they are titled or held. This disclosure is made under oath. Therefore, intentionally failing to disclose any assets, including cryptocurrency is perjury, which is a felony punishable by prison time. If the fraud is uncovered, it also constitutes grounds to have the entire divorce decree reversed.
- Full Financial Disclosure: As we just noted, New Hampshire law requires both parties in a divorce to make a complete and accurate disclosure of their assets, including any cryptocurrency holdings. Hiding cryptocurrency assets violates this obligation and can result in penalties.
- Expertise and Investigation: If one party suspects the other of hiding cryptocurrency assets, they can seek the assistance of forensic accountants or digital asset experts to uncover any hidden transactions or holdings.
- Court Authority: In cases of suspected hidden assets, New Hampshire courts have the authority to order the party in possession of cryptocurrency to disclose and allocate these assets as part of the equitable distribution process.
- Tax Implications: Failing to disclose cryptocurrency assets may have tax consequences, as the IRS treats cryptocurrency as taxable property. Non-disclosure may result in additional penalties related to tax evasion.
While some individuals may be tempted to use cryptocurrency to hide assets during a divorce, it is crucial to recognize the potential risks and legal implications involved. New Hampshire’s equitable distribution principles, combined with the growing expertise in forensic analysis, make it increasingly difficult to conceal cryptocurrency holdings successfully. We highly recommend seeking professional legal advice to ensure compliance with the law and to protect your rights and interests during divorce proceedings.