As the world of money changes, so do the ways that people try to hide assets in their divorces. For those of you who don’t know what Bitcoin is, in short, it is a technology that is changing the way people transact just like the internet and email changed the way that people communicate. As a New York divorce lawyer, in contested divorces we now go through emails and hard drives more than we examine actual hard copies of the mail. To learn more about Bitcoin basics, visit bitcoin.com.

Bitcoin has been defined by its mysterious inventor, Satoshi Nakamoto, as “A Peer-to-Peer Electronic Cash System.” It is known as a cryptocurrency because users can pseudonymously transfer money directly to one another, peer to peer, without the need for a middle man like a Western Union, a bank or even a governmental authority. I say pseudononymously because although users are assigned a string of numbers as a Bitcoin wallet address where they store their Bitcoins, with some forensic work these addresses can be associated with the users’ actual identity and therefore tracked. Obviously and unfortunately, in highly contentious divorces people sometimes do not want to play by the rules — they want to wrongly hide assets from their spouse that would otherwise be subject to equitable distribution.

Before you go ahead and try this at home (hiding marital assets with Bitcoin that is), please know that I am in no way condoning such behavior and that doing so is wrong. In matrimonial matters each party has the right and ability to conduct discovery into the financial affairs of the other party, issue subpoenas and interrogatories, and conduct depositions. If large amounts of money are being transferred to a Bitcoin exchange where you are purchasing bitcoin with fiat currency, that will certainly raise red flags and give us a place to look. There are forensic analysts who specialize in tracking Bitcoin and other cryptocurrencies. Also, if there are large cash withdrawals or transfers that were used to purchase Bitcoin from localbitcoins.com or another peer to peer point of sale, this too will sound the alarm. If we were unable to find out what you were doing with those cash withdrawals, and you could not produce evidence as to what you were doing with that cash, we would argue that your unauthorized withdrawals were dissipating marital assets and therefore, your share of equitable distribution should be reduced accordingly. There are services that are called Bitcoin mixers which will try and make it more difficult to follow the trail of a users Bitcoins. These transactions too can be analyzed and traced.

Although there have been other cryptocurrencies that have recently been created which have stronger privacy like Monero and Zcash, using them for nefarious purposes is ultimately very risky and if one was caught doing this, the Court would certainly frown upon your sneaky, underhanded and unethical attempt to shield your assets from equitable distribution.

The bottom line is that hiding assets in a divorce, through Bitcoin or by any other means, is wrong and risky.