Although the virtual currency known as Bitcoin has not been around for very long, it has already earned a rather infamous reputation. Bitcoin does not exist as a physically tangible form of money, nor is it regulated by a governmental agency. As such, it is not uniformly recognized as a system of currency.
Bitcoin’s less-than-legitimate status has made it a convenient vehicle for nefarious purposes. For instance, the online drug site “Silk Road” conducted its illegal drug and weapons sales only in Bitcoin. And now, some family law attorneys are warning that Bitcoin has become a way for individuals to hide assets from their estranged spouses in high-asset divorces.
Attorneys can seek a court order for disclosure if they feel that their client’s spouse is attempting to conceal wealth. It may not be long before digital currencies like Bitcoin are included in such court orders.
Using Bitcoin to hide assets is also risky. It may seem like an easy way to hide wealth and maintain relative anonymity. But the fact that Bitcoin is not a government-recognized currency means that it is also not protected from theft and fraud the same way that an FDIC-member bank would be. At least one large Bitcoin exchange website has already been hacked.
Wealth concealment is often a concern in high-asset divorces, and Bitcoin is among the newest of a plethora of methods used hide assets. If you worry that your spouse may be trying to conceal how much wealth they actually have, please share these concerns with your family law attorney.
Source: CNBC, “Bitcoin could be used to hide assets in divorces, warn lawyers,” Jane Croft, June 3, 2014