Nowhere to hide (nearly).
In a recent Financial Times article, the author Jane Croft suggested that wealthy clients could be using the bitcoin to hide assets from their ex. Whilst there is greater anonymity by using bitcoin rather than a bank, the bitcoin is just as much of an asset as cash in a bank account. Sure, bitcoin transactions can easily move money outside of the jurisdiction making enforcement of English court orders more difficult, but husbands could sail their yacht to the Bahamas and achieve the same result.
There is nothing new here and the English courts are very used to spouses who creatively attempt to avoid disclosing their assets and wealth in divorce.
One of the key weapons to use against the non-discloser is the threat of a freezing injunction. If there can be shown a real risk that the dodgy spouse may dissipate (spend) a known asset by converting it into bitcoins, cocaine, or a red Ferrari then the court can make a freezing injunction preventing him or, say, his bank from dealing with the asset at all. The applicant must have a good arguable case with clear evidence but she does not need to prove it outright. Urgent applications can be made without telling the other party but this would be exceptional and last-minute notice can still be required.
Even if the non-disclosing spouse hides his assets from of his ex by, perhaps, giving them to a reliable friend, the court can make what are called ‘negative inferences’. Judges have been frank about this type of activity, in one case saying “If the husband seeks to camouflage his assets, it is better that the court is drawn into making an order that is unfair to him, rather than making an order that is unfair to the wife.” Last year, the court awarded Michelle Young £20,000,000 despite her husband, Scot Young, providing evidence that he was worth nothing. The court simply was not convinced that he was penniless and decided that he could find the money from hidden assets.
The point for us mere mortals (who cannot imagine being able to ‘hide’ £20,000,000) is that if there is any evidence that your ex is dealing with any asset to his/her then it is important for action to be taken quickly. This issue can get hopelessly complicated very quickly and if you think that lawyers are expensive, you should try and instruct forensic accountants to look into dodgy transactions.
Considering the current bitcoin market, the husband who put all of his assets into bitcoins to protect them from the divorce probably now has a whole new set of problems and is still getting divorced. Crossing the line into fraud or dishonesty to shelter assets from a divorce is a very high risk strategy which can lead to unintended consequences.
As in most things about divorce, good quality advice from the outset is essential. If you would like more information or expert advice on this or any other area of family law please gives me a call me Randal Buckley on 020 8899 6620 or email me at email@example.com.