Dividing Bitcoin When Relationships End
Dividing assets is never pleasant when you are facing separation or divorce. The law tries to keep up with technology, so we get many an increasing number of calls regarding Bitcoin property division. Alberta based Kahane Law Office offers family law lawyers with knowledge and experience when it comes to both cryptocurrencies and Bitcoin property division.
What Is A Bitcoin And Other Cryptocurrencies?
Family law lawyers must understand Bitcoins so that Bitcoin property division occurs in an equitable manner that follows the law. Bitcoin is a decentralized digital currency. No government controls it or can produce it. No more than 21 million Bitcoin will ever be available. Anyone can purchase it and they can be bought through a variety of exchanges online or through Bitcoin ATMs in person. Coins are stored in online wallets or as a code stored on a USB key or a piece of paper. Whoever has the code can access or transfer the coins. Other common cryptocurrencies (also called altcoins) include Ethereum, Litecoin, Dash, Monero and ZCash.
What Does A Bitcoin Wallet Look Like?
A colleague of mine has generously provided his own Bitcoin wallet so that you can gain a better understanding of what to look for.
Instead of a name, a code beginning with “3Auxm” identifies this account. Most importantly, you can see that this specific wallet currently holds no Bitcoin but that a total of 55 Bitcoin passed through the wallet during its lifetime.
Why The Interest In A Different Currency?
Bitcoin and other cryptocurrencies have been in the news because they’ve made early investors a lot of money. People use the currency for underground anonymous transactions and has become popular after speculators found they could double their money quickly (or lose it just as fast). There are many other reasons people value an independent currency. It can kept in secret and it can weather the storm of an unpredictable economy. Bitcoin property division is difficult if you do not know they exist.
Bitcoin property division cases in the US and UK involve parties that had invested early in Bitcoin which exploded in value. Because the value went up by two thousand per cent during 2017, a marginal investment of $20,000 in 2016 would have been worth over $400,000 at the peak.
What Is Bitcoin Worth?
As of December 7, 2018, a single Bitcoin is worth $4,426 CAD. In 2017, a single Bitcoin peaked at over $24,000. The currency is considered by many as highly volatile, meaning that the value of a Bitcoin today could be drastically different than the value a week later.
Judges in other countries have struggled with how to value an asset that is so volatile. It is important to note that significant lag times sometimes exist for converting cryptocurrency into the Canadian or American dollar. As a result, the only completely accurate way to value cryptocurrency is to sell it.
How Canadian Courts Deal With This New Technology?
The same rules apply to Bitcoin under the Matrimonial Property Act as other assets, they are treated like stocks or other taxable investments. Surprisingly, there is only a single family case in Canada that mentions Bitcoin or cryptocurrencies. In this case, one of the parties earned part of his income in the form of Bitcoin. Therefore the court needed to deal with Bitcoin property division. Because the employer provided sufficient documentation to convert the value to Canadian, the court treated it like any other currency.
Divorcing Or Separating Someone With Bitcoin?
Be sure to inform your lawyer if you believe the opposing party may have purchased Bitcoin at some point during the relationship.Better yet, make sure that your lawyer knows what Bitcoin is and how to investigate it.
Before you separate, seek any evidence that your spouse or partner has purchased Bitcoin or other cryptocurrencies in the past. Individuals who “mine” their own Bitcoin will own a computer mining “rig” similar to the image displayed to the left.
Concerns With Bitcoin And Bitcoin Property Division
Anticipating a separation, a dishonest spouse may hide their cash in cryptocurrency. They may fail to inform their significant other that they had purchased Bitcoin during the relationship. If they were early investors, their Bitcoin wallets could be substantial. The rapper 50 Cent accepted Bitcoin when selling an album in 2014 and it was reported (but later denied) that the value increased to $8 million in worth in a forgotten account! Old accounts may be significant when it comes to Bitcoin property division.
How do separating couples deal with this new reality? Start by telling your lawyer if your spouse has ever purchased Bitcoin or if they talk about it. People who invest in Bitcoin tend to be passionate about it.
How Family Law Lawyers Help With Bitcoin Property Division
If the need arises to question the opposing party, your lawyers will ask your ex-spouse, under oath, whether they own any cryptocurrency or have ever purchased any. If there is any evidence that a party has purchased Bitcoin, ensure your lawyer asks to inspect their online wallet. Your lawyer can reconcile any bank statements against transactions online and locate a full transaction history.
Getting Family Law Help With Cryptocurrencies & Bitcoin Property Division
Cryptocurrency get used as a high-tech method of burying cash in your back yard. Your lawyer should ensure that the financial disclosure you receive is thorough and complete.
At Kahane Law Office we keep ourselves informed of the latest technology that can impact your separation in order to ensure you receive the best possible outcome for your case. Call us if you need help dividing assets in a separation or divorce involving cryptocurrencies. You can reach us in Calgary at 403-225-8810 (toll-free at 1-877-225-8817), or email us directly here.