Your wife cleverly squirreled away some of her money in cryptocurrency, assuming it was out of reach in divorce. You, who still have trouble remembering your ATM PIN, have no idea what a Bitcoin even is, or where Ethereum might be on a map. How could cryptocurrency even be an asset in Virginia divorce? And how can you find out what she has socked away in Tether (whatever that is)?
What is Cryptocurrency?
For centuries, economists and financial gurus have argued over currency systems and the value of paper or rare metals. Then, with the dawn of Tim Berners-Lee’s internet another choice in hoarding wealth arrived: cryptocurrency, or virtual or digital money. It takes the form of tokens or imaginary “coins.” Cryptocurrency is almost always intangible and electronic only.
The money is called cryptocurrency because elaborate cryptography allows the money to be created, processed, traded, and saved across decentralized systems without regard to borders, governments, or oversight.
An investor need not be a Colombian drug lord to want cryptocurrency. Heavy online shoppers like the security of buying with cryptocurrency that protects their identity and financial information. Some are bargain shoppers seeking the rewards for trading in cryptocurrency, and some like the investment potential. Of course, some like to shelter assets ahead of a nasty divorce.
Types of Marital Assets
Under Virginia law (by which we refer to, for all you Code of Virginia fans out there, to §20-107.3, ), all property in a marriage falls into three categories to be divided equitably in separation and divorce:
- Separate property — Property you (or your departing wife) acquired before the marriage, or that you or she received by bequest or inheritance
- Marital property — Property you both worked to acquire during your marriage
- Commingled property — This is a tricky category that largely depends on where the property ends up; if, for example, you sell separate property (say, a way cool condominium you owned as a totally awesome bachelor) and use the proceeds as a downpayment on a marital vacation home, you have converted the separate property into marital property
The precise law is titled “Court may decree as to property and debts of the parties,” and we refer to it so often we’re thinking of having tee-shirts made. Paid for in cash, of course.
Is Cryptocurrency an Asset in Divorce?
Even if it is a fleeting wisp of electrons in a cloud vault somewhere, cryptocurrency is most certainly an asset in a divorce. If you suspect your receding wife has cryptocurrency, your attorney can find out during discovery. She is legally obligated under Virginia law to divulge all assets, real and intangible, which includes cryptocurrency.
If you know your slowly diminishing wife has cryptocurrency because you have physical or electronic evidence obtained by legal means, hold onto the evidence and turn it over to your divorce attorney.
Where is that evidence? Look at credit card statements, joint account bank records, and emails you can legally access (never try to break through her passwords or security measures on her devices).
The challenge is to determine whose real American money she used to buy cryptocurrency, and when. If she bought it at any time during your marriage, and used income she received during your marriage, the cryptocurrency is a marital asset. You get an equitable share.
If she can prove she bought the cryptocurrency using her inheritance or cashed out a personal property asset from before your marriage, she may claim it as personal property. You may still be entitled to a share of the cash value of the cryptocurrency if you can demonstrate you provided intangible support for her that enabled her to invest or save using cryptocurrency.
Can I Get Real Money for Cryptocurrency?
While our paper money and metal coins could be argued to be no more real than electronic currency like Cardano or Polkadot, most of us would still prefer to see a nice, neat stack of $100 bills than an electronic wallet saying you own 3,000 Stellar Lumens (well, if you’re a 13-year-old sci-fi fan, you might like that, we suppose).
Cryptocurrency can have real value, and you should not ignore the opportunity to receive your equitable portion of money invested in it. It can be traded out to real American money as part of the divorce proceedings.
Ask Your Family Law Attorney
With cryptocurrency or any divorce issue, you are not supposed to be an expert. Turn to your attorney for help and advice in sorting out what is legally, rightfully yours, what property is to be split equitably under Virginia law, and what is rightfully your soon-to-be ex-wife’s property.
An attorney can get through the firewalls of security through discovery if the attorney knows where to look. Most judges will not agree to a “fishing expedition.” If they are presented with a motion that says something to the effect, “My client has reason to believe his wife has cryptocurrency in the form of investments in Litecoin and requires the passwords and wallet codes for such accounts,” most judges will grant the discovery order.
We do not pretend to be experts on cryptocurrency (and prefer to be paid with American money, thanks), but at The Firm For Men, we can help you get your fair share of any marital asset. Whether it’s an original artwork, fine jewelry, or mucho Monero, we stand ready to work tirelessly for you. Contact us today or telephone our office at (757) 383-9184.