Bitcoins are an online payment system, also known as a virtual currency. Unlike other world currencies, Bitcoins are not controlled by any government, and can be traded and stored entirely anonymously. The popularity of Bitcoins in recent years is due at least in part to the privacy advantages of the currency. From a divorce perspective, there is a serious risk that any party holding Bitcoins as part of matrimonial assets will not disclose the fact to their spouse. But are they obliged to do so?
Financial Disclosure: Form E
When divorcing, you will need to undertake an exchange of financial information with your former partner, to negotiate a financial settlement. The form most commonly used, and the one used for the court process, is called a Form E. This states that “you have a duty to the court to give a full, frank and clear disclosure of all your financial and other relevant circumstances. A failure to give full and accurate disclosure may result in any order the court makes being set aside. If you are found to have been deliberately untruthful, criminal proceedings may be brought against you for fraud under the Fraud Act 2006. The information given in this form must be confirmed by a statement of truth. Proceedings for contempt of court may be brought against a person who makes or causes to be made, a false statement in a document verified by a statement of truth.”
Despite these words of warning, participants in the process may seek to hide assets, in an attempt to reduce the amount they are ordered to pay to their former partner. Historically, individuals may have done this by withdrawing cash in small, frequent amounts on a basic level, or on a more complex scale, using complex trust or corporate structures to distance themselves from their money. We now live in a more virtual world, and the opportunities of living financially “off grid” are increasing, tempting divorcing individuals to use these schemes to hide assets.
Investing in these alternative currencies, or placing money in online settings such as Paypal or Bitcoins, does not, however, mean that this money is not relevant to the process. It simply means that it is more likely to be overlooked, unless the right questions are asked by the legal team of the investor’s spouse.contact us today. We will remain fully operational for the duration of the Coronavirus COVID-19 Crisis. Copyright 2013-2020 Rainscourt Law LLP. All rights reserved.