How to Proceed When Your Spouse is Concealing Cryptocurrency Holdings

Published on
September 19, 2024
Written by
Angel Murphy, Esq
Category
Divorce

Cryptocurrency Holdings May Be Subject to Division in Maryland

Cryptocurrency – Bitcoin, Ethereum, and so forth – have taken the world by storm, creating a lot of new wealth and, in many ways, questioning the basis of our whole economic system. While the long-term future of this asset class may be uncertain, in the short-term it appears that this asset will remain viable.

As we discussed in our previous post, cryptocurrency holdings have been officially classified as intangible personal property by the IRS. The IRS made this announcement in its official publications. As a consequence, these holdings are taxable to the extent of any gains. Also, cryptocurrency holdings are subject to division in the property division phase of divorce to the degree that these holdings are categorized as “marital property.” This means that, if your spouse invests in cryptocurrency during marriage, or if your spouse’s cryptocurrency holdings appreciate during marriage, you maybe entitled to a portion of those assets.

Gather as Much Concrete Evidence to Prove Concealment of the Holdings

By its nature, cryptocurrency is relatively easy to hide. These currencies are stored in “digital wallets,” and these wallets are not tied to a specific owner by name. Digital wallets have their own identification code or passcode, and so the owner accesses the wallet by using numbers alone. This gives cryptocurrency an unprecedented level of anonymity. However, there are ways to identify owners of wallets, especially when owners attempt to “cash out” cryptocurrency by converting these currencies into US dollars.

If you suspect that your spouse may be hiding cryptocurrency holdings from you, try to gather as much concrete evidence as you can. Concrete evidence can take different forms, but conversions of cryptocurrency into US dollars can show up on bank statements or other types of documents. Try to obtain copies of bank statements if possible. If you believe that certain purchases were used with cryptocurrency, obtain copies of receipts. The court cannot compel division of cryptocurrency holdings without evidence, and so do your best to gather as much as possible.

Consider Hiring an Outside Professional for Assistance

In your quest to gather evidence, hiring an outside professional may be strategically advantageous. The reason is because certain professionals have expertise in this area, and this expertise may be highly useful in this endeavor. For example, you may need to hire a CPA or bookkeeper who is aware of cryptocurrencies and how they operate. That person may have good information about how to track down hidden cryptocurrencies. Or, you may want to consult with a computer specialist or private investigator. Cryptocurrency is a creation of computer specialists, and so a computer specialist might have advice on how best to track down hidden holdings. Private investigators may be useful in keeping an eye on your spouse and looking for clues on the hidden holdings deriving from his or her behavior. Remember, the court cannot divide something if it’s not found, and so you need to produce some type of evidence if you suspect that your spouse is hiding these assets.

Contact the Murphy Law Firm for More Resources

If you would like more information on cryptocurrency holdings in the property division phase, or about property division in general in Maryland, contact one of the family law attorneys at the Murphy Law Firm today by calling 240-219-5243.

Angel Murphy

Personable. Passionate. Persistent.

cryptocurrency | marital property | divorce | property division | hidden assets | IRS classification | digital wallets | Maryland family law | evidence gathering | asset concealment

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