Attempting to hide assets during an Ohio divorce is not new. What is new, however, is the way in which some high-asset spouses do it. If you have not heard of Bitcoin and the other cryptocurrencies, you should research them and how they work if you suspect that your spouse is hiding assets from you. You also should alert your attorney to them so that (s)he can investigate whether or not your spouse is using them.
A cryptocurrency, a/k/a digital currency, is a “geeky” form of money. Actually, Bitcoin and the other cryptocurrencies are not money at all in the way we normally use that word. You cannot see or touch them. They are virtual money that more and more people are using to buy merchandise and more and more merchants are accepting as payment.
Types of cryptocurrency
Bitcoin is the most well-known cryptocurrency, having been around since 2008. Other digital currencies out there in cyberspace include the following:
- Ethereum
- Ripple
- Litecoin
- Monero
Bitcoin’s downside
As convenient as it may be to buy things with Bitcoin, however, cryptocurrencies have a decided downside. While all U.S. cryptocurrency accounts must be tied to a bank account or credit or debit card, the only personal information a person must give to set up an account is an email address. Consequently, cryptocurrency accounts and the “money” in them are very difficult to find and trace when the account holder wishes them to remain essentially anonymous.
Not surprisingly, Bitcoin and the other cryptocurrencies are big favorites with money launderers, darknet marketeers, ransomware scammers and other criminals. They also are big favorites of anyone wishing to hide assets.
Tax implications
Cryptocurrencies have no set value. Rather, their worth fluctuates from day to day, sometimes from hour to hour, depending on a variety of factors. In this regard they are analogous to investment accounts. The account holder can “make a killing” or lose his or her entire investment.
Per the Internal Revenue Service, when an American cryptocurrency “investor” takes “money” out of his or her account, (s)he must report the total annual amount on his or her federal income tax return and possibly pay capital gains tax on it. There again, however, if the account holder chooses not to report his or her cryptocurrency account and its gains and losses, this may constitute tax evasion, but can the IRS discover it? Given the anonymity of cryptocurrency accounts, the answer is problematical at best.
The same holds true for suspicious spouses and the attorneys who represent them. If you do not know what you are looking for, you are unlikely to find it. Nevertheless, if you suspect that your spouse is hiding assets during your high-asset divorce, your best strategy is to alert your attorney of the possibility that (s)he has a Bitcoin or other cybercurrency account now that you know about such things.
