How do people use digital currency to hide assets?

On Behalf of | Mar 23, 2022 | Property Division |

Hiding assets during divorce is not a new phenomenon. It happens often, due to various reasons. Some may feel a genuine fear for their financial future, while others may simply want to spite their ex-spouse.

In any case, this is an illegal activity, and your spouse could end up in serious trouble if caught in the act. But how can you do that with digital assets?

The insular nature of digital currency

CNBC discusses the use of cryptocurrency in hiding assets. Cryptocurrency, digital currency and digital wallets have seen a recent uptick in popularity, with terms like bitcoin and NFTs coming into the mainstream vernacular within recent years.

However, before this, cryptocurrency was largely an insular community that did not get enough traction to have extreme scrutiny from government and regulatory entities. For example, it was not until this tax year that the IRS decided digital currency was a taxable form of currency.

Because of this, many people trying to do illegal things like money laundering turned to cryptocurrency as a way to do it without much tracking or scrutiny. This trickled down to less severe crimes, like hiding assets in divorce, because most spouses and even divorce attorneys did not know about it.

Noticeable warning signs

However, in addition to more people having an awareness, the red flags indicating hidden assets also remain the same even when it involves digital wallets. For example, spouses may grow much more cautious of the financial information they let you see freely. They may seem more guarded about their electronics. You may also notice a significant decrease in their superfluous spending.

If you notice such problems, you should consider contacting legal aid to learn more about your options.