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Cryptocurrency: What You Should Know About Cryptocurrency and Your Divorce

Cryptocurrency and your divorce

Does the word “cryptocurrency” give you a dark and foreboding, nefarious feeling? Perhaps it’s the word “crypt” in the namesake, or perhaps it is cryptocurrency’s edgy and experimental reputation that makes the shivers run down your spine. Whatever the reason, rather than running away in terror from the idea of cryptocurrency, you should be running to an experienced family law attorney if there is indeed cryptocurrency involved in your divorce case. Here’s why. (Spoiler alert- many coin and money puns forthcoming.)

Cryptocurrency, sometimes called crypto-currency or “crypto,” is any form of currency that exists digitally or virtually and uses cryptography to secure transactions. With crypto, the purchaser is issued an account, also called a public address, where the funds are stored, as well as a private key to access and control the account. This private key is essential to access the funds. Anyone who possesses the correct private key can spend the funds in the account. However, if the private key is ever lost, the funds in the account will be locked away. Permanently. Do not pass go, do not collect $200. (Excuse the fitting Monopoly reference.)  Further, if a private key should be stolen, the currency can be stolen without any recourse for the owner. 

Cryptocurrency first reared its “head” (heads and tails, get it?) in California family law in the appellate case Marriage of DeSouza, 54 Cal.App.5th, 25, 266 (2020). In this case, Husband purchased $45,000 worth of Bitcoin just three months after Wife filed for divorce. In violation of the automatic temporary family law restraining orders, prohibiting Husband from transferring or hiding funds, Husband repeatedly transferred funds to various digital wallets and used proxies to purchase his Bitcoin for him. By Dec. 2017, the price of Bitcoin was $13,500. The Bitcoins had appreciated from their initial purchase price of approximately $45,000 to around $8 million. His wife went in post-judgment (after the divorce was final) to seek an emergency order for Husband’s failure to disclose information about the Bitcoin investments.

The court found that Husband breached his duty to his wife by failing to disclose the Bitcoin information in his mandatory declarations of disclosure, including his initial purchase of $45,000. The trial court ordered Husband to transfer $22,500 in cash and 249.445 additional Bitcoins to Wife, along with the corresponding Bitcoin gold and Bitcoin cash. At the highest value, the additional Bitcoins Husband was ordered to pay Wife was valued at $3,367,507.50. Now that’s no chump change. Further, Husband was also ordered to pay Wife’s attorneys’ fees and costs incurred in bringing her action. In other words, Husband got left holding the bag. 


What does DeSouza mean for your case? 

• Time is of the essence. Because of the volatile nature of crypto, the values can dramatically change overnight. In one day, Bitcoin’s value has dropped 30%! ( 

• You need to hightail it (tails, get it?) to an experienced family law attorney to discuss strategy and timing. While we cannot predict the volatile cryptocurrency market, we strategize to protect your assets from plunging by asking the court for an order to stop crypto trading or liquidate it. Depending on the facts of your case and the extent of crypto transactions, a good family law attorney may recommend a forensic accountant become involved.

• If there is potential cryptocurrency in your case, you and your spouse must disclose it in your financial disclosures. 

• Even after a divorce is final, there is a chance to go back and hold your spouse accountable if you learn that they withheld information about cryptocurrency during the divorce process. However, the longer you wait to return to court, the harder time you’ll have to prove your case. In addition, the value of the cryptocurrency can dramatically change.  If this situation applies to you, don’t wait!

Should cryptocurrency be an issue in your case, you need the advice of a knowledgeable and experienced family law attorney who understands these types of assets to help you navigate the waters. If you would like to schedule a consultation with our office, you can contact us at (949) 234-8280 or visit our website at Divorce.Legal. 

And, remember:  Having the Right Attorneys Makes the Difference.

Hiring The Right
Lawyers Makes The Difference