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The Rise of Cryptocurrency & the Fall of Marriage

– Contributed by Bailey Geller

Cryptocurrency is one of today’s hottest topics, but the recent fluctuation in value should not be the only concern investors are talking about—especially investors about to get married or going through a divorce. Inherent in its design is the difficulty in tracing cryptocurrency, a great appeal to many users. Although transactions are still regularly recorded, they are generally more difficult to trace back to the user. In fact, due to the recent surge in cryptocurrency crimes, the FBI recently announced the formation of an entirely new team dedicated solely to virtual asset exploitation.

Not only is it attractive to use cryptocurrency for personal security and privacy, but it also makes for an ideal asset spouses often use to hide funds and risk-taking behavior during a divorce. Unless both spouses know of the existence of the cryptocurrency transactions, it can be incredibly challenging to discover it. Our attorneys can help with this process.

Once the cryptocurrency is discovered, however, it may be treated as marital property that is eligible for division. Determining the value of cryptocurrency, although slightly more difficult, is feasible through an exchange rate that converts it into U.S. dollars. The cryptocurrency will then be treated the same as any other asset for property allocation.

Consider an example with Bitcoin, the leading cryptocurrency. If a spouse acquired Bitcoin prior to the marriage, or received it as a gift or inheritance, it would likely be treated as nonmarital property and would not be divided. On the flipside, if a spouse acquired the Bitcoin during the marriage, and did not receive it as a gift or inheritance, it would likely be deemed marital property.

Proactively, the distribution of cryptocurrency could be agreed upon in a prenuptial agreement and your assets could be protected. Reactively, absent a valid prenuptial agreement, cryptocurrency must be discovered and properly allocated. Attorneys at Miller|Butler can help with both.

Cryptocurrency is often a confusing and frustrating matter to understand, especially during a divorce or upon marriage. It is normal to have questions and concerns on how this may affect you. We can answer those for you. It is more important now than ever to plan ahead for the unexpected. Whether you are about to get married, or whether your marriage is not working out as planned, call us today and we will help ensure that you are fully aware of what is yours and how to protect yourself.

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