What can I do if my ex is hiding crypto stash from me during divorce?

Think your ex has a secret bitcoin stash? A legal expert explains how to hunt one down and the stiff penalties for hiding crypto (and other assets) in a divorce

Toby Yerburgh: Luckily most people that have invested in crypto love to boast about it

Toby Yerburgh is partner and head of family law at Collyer Bristow.

‘It’s all about the cake,’ one well-known divorce lawyer used to say to every client. ‘You have to work out how big it is, then agree how to cut it.’

Simple, you might think, particularly when the starting point for cake division is often straight down the middle. 

But clearly not, given how many divorce lawyers there are and how much they charge for their services.

In practice, of course, the main area of contention is working out the size of the matrimonial pot by identifying and then valuing each party’s assets.

Most assets are relatively easy to identify – properties, stocks and shares and UK bank accounts, for example. Some are less so, such cash under the bed or gold bars in offshore banks.

But most difficult of all to identify, and these days becoming much more common, are crypto assets.

These were estimated to be worth £1.5trillion worldwide in February 2022, including £680billion held in bitcoin and £340billion in ethereum. 

So how will you know if your ex holds bitcoin?

Well, luckily most people that have invested in crypto love to boast about it.

In fact, there is an evangelism amongst many investors that means it is quite likely that your spouse will have told you (and everybody else) if they have made a killing from getting into such investments at the right time (which generally means at least a year or so ago).

It will be a very rare successful crypto investor who tells no one about their savvy investment skills.

If your spouse has made a fortune in this area, they have a duty to disclose such assets in exactly the same way as any other asset class.

And the penalties for deliberate non-disclosure can be very severe, from costs penalties to fines and prison. 

Crypto assets: Estimated to be worth £1.5trillion worldwide in February 2022, including £680billion held in bitcoin and £340billion in ethereum

Crypto assets: Estimated to be worth £1.5trillion worldwide in February 2022, including £680billion held in bitcoin and £340billion in ethereum

What can you do if you think your ex is hiding crypto during a divorce?

If you know or have very good reason to suspect your spouse has not disclosed their crypto assets you are going to need specialist help to uncover and preserve them by means of a freezing order.

This can include obtaining disclosure orders against entities that hold crypto currency (such as Coinbase), seizure of computers, and search orders regarding safe deposits where physical evidence of crypto keys (a unique string of letters and numbers that act as a password to the ownership of the asset) may be kept.

Tell-tale signs of crypto ownership may be found in bank statements where payments have been made to coin exchanges, in chat rooms where your spouse may have discussed their latest purchases and in your spouse’s browsing history on the family PC. 

Do you have a question about divorce and your finances? 

Write to This is Money at experts@thisismoney.co.uk and we will try to answer. Please put DIVORCE in the subject line. 

How do you work out what the crypto is worth?

Once you have established the existence of crypto assets they need to be valued. Given the notorious volatility of such assets this is easier said than done.

It may well be that unless you reach a compromise that the court will order them to be shared rather than ordering payment of a lump sum consisting of a fixed amount of fiat money (legal tender).

Before that happens, you will want to be properly advised on how ownership of crypto works, the risks and tax implications of ownership and how you can exchange crypto for fiat money and the costs of doing so. 

What if you own crypto and are getting a divorce?

On the flip side, what if you are sitting on valuable crypto assets that you owned a long time before your marriage but became much more valuable during the marriage?

Do you have to share these equally with your soon to be ex-spouse?

How do you find a decent lawyer? 

Word of mouth is often the best way to find a professional to help you so ask around, writes This is Money.

You can also use the Law Society’s search tool – look under family.

It is often a good idea to find a financial adviser early in the process of divorce too.

This will help you ensure assets are valued and split fairly, especially pensions which can be worth as much or more than the family home. 

Read our guide to new ‘no fault’ divorces here.

Not necessarily. Premarital assets are not automatically divided equally on divorce and ‘passive growth’ of such assets is often discounted by the courts. 

That said, your spouse’s (and any child’s) needs will trump any argument that such assets should be kept entirely free from any claim if there are insufficient other assets to make what the court considers to be fair provision.

The starting point for division of crypto acquired during the marriage will be an equal split of the net value. 

This should take into account the costs of realisation – in plain terms, the cost of transfer and conversion into real money – and any potential capital gains tax payable upon disposal. (Unlike with fiat currency crypto gains are subject to CGT.)

Whether you bought crypto before or after the marriage you will have to disclose your holding. If you are subsequently found not to have done so, not only are you likely to be subject to the penalties already mentioned but any final court order obtained could be set aside. 

Action to take if you are getting divorced and one partner (or both) owns crypto

Whether you own crypto assets or suspect that your spouse does, professional advice at an early stage of a divorce is likely to be the only way to ensure you get a fair slice of the cake.

When you are looking for a lawyer to represent you, look online to see if anyone you are considering holds themselves out as an expert in this area. Then, when making initial contact, ask them if they have ever dealt with a case involving crypto currency previously.

When speaking to them you should also check whether they have at least a basic understanding of what a crypto currency is, how it can be held and the tax, other costs and practical implications of realisation or transfer.

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