Bitcoin, Hidden Investments and Family Law
May 2, 2019
Since its advent in 2009, Bitcoin has provided an alternative currency that is difficult to trace and unregulated by banks or government bodies. Cryptocurrencies provide a new challenge to family law with major concerns raised by lawyers in relation to disclosure obligations.
The advent of cryptocurrencies brings about similar challenges to cash, which is difficult to locate unless you know where to look. The virtual dimension of such currencies only tends to exacerbate the issue. Consider the online ‘wallet’ (like a bank account) for Bitcoin users who have public ‘keys’ (to receive funds) and private ‘keys’ (passwords needed to transfer funds). These keys do not hold or disclose any personal information about the holder of the wallet, let alone where it is stored or may be accessed.
Family Law Proceedings and Virtual Assets
Parties to family law proceedings are obliged to provide full and frank disclosure of their financial affairs in the Federal Circuit Court (Regulation 24.03) and in the Family Court (Rule 13.04). Thus, evading proper disclosure of virtual currencies is clearly being in breach of the disclosure obligations.
This is not just a question of ethics. The family courts have power to dismiss a person’s case, order costs against that person or imprison them for contempt of court if disclosure is held not to have been made. Even if virtual assets cannot be located, evidence indicating that assets are being siphoned off can be used to make an adverse inference against the offending party, with orders made to adjust the property settlement accordingly.
Parties that suspect their former spouse of hiding virtual assets may seek an Anton Piller Order which involves ordering the seizure and search of computers or other electronic devices in an attempt to locate the virtual assets. This order should be sought in conjunction with a freezing order to prevent the other party from electronically moving their assets elsewhere. A subpoena may also be filed against a host platform service or a business that the other party has invested in to obtain further information. Such actions need to be balanced by the size of the asset pool, the costs involved and the chances of recovery.
How can Hutchinson Legal help?
If you or someone you know is going through a separation, we strongly encourage you to consult a family lawyer sooner rather than later. For further information, please contact Joshua Davis of our family law team for expert advice and assistance.« Back to news