Bitcoin: THE BRAND NEW Asset Protection Strategy in Divorce Cases

 

"Asset protection" has long been a strategy in divorce cases across the United States. The term "asset protection" refers to the usage of a legal strategy to be able to hide or shield assets from the Courts. Bitcoins, the relatively new internet currency, will likely become the next frontier of asset protection.

In divorce cases, asset protection can take many forms. Sophisticated asset protection techniques involve transferring money to an overseas account, the formation of legal entities (trusts, corporations, limited liability companies) and other methods.

The most unsophisticated and simple form of asset protection, and perhaps the most frequent in divorce cases, is merely holding money in the proper execution of cash (i.e., inside a home safe or in a bank safety deposit box). In this way, a person that is in the process of divorce believes that he can "protect" the cash from the divorce process. spicetoken The divorcing spouse might keep the existence of the money secret from his spouse, divorce lawyer and Court, to avoid being ordered to share the money with his spouse. This strategy may or may not be successful, nonetheless it is surely not legal because it requires that the individual misrepresent his assets to his spouse and to the Court.

A complicated divorce lawyer will learn how to uncover hidden assets of the kind through the examination of financial records and other method of legal discovery. Bitcoin, however, has the potential to displace the hiding of cash as the most common type of asset protection in cases of divorce. Given the structure of the bitcoin system and most divorce lawyers ignorance regarding bitcoins, it could become a significantly more successful method than hiding cash.

Bitcoin may be the digital currency that was created in '09 2009 by the anonymous developer known the by pseudonym as Satoshi Nakamoto. It is a currency that exists only in digital form. All bitcoins and transactions are "registered" on the bitcoin block chain that is updated by bitcoin users rather than centralized authority. The transactions, however, do not include names but instead the digital identification of every bitcoin. Bitcoin owners keep their bitcoins in a bitcoin wallet. The wallet is not necessarily a physical wallet, but instead various options for storing the digital identification of the bitcoin. The wallet may be kept on some type of computer, the server of a bitcoin wallet website, or perhaps a piece of paper.

While is theoretically possible to trace the transfer of a bitcoin by examining the block chain, one is only going to discover the public identification key of the bitcoin rather than the name of the owner. If the wallet is continued someone's computer or on a website (where a party to a divorce registered his name) it is possible to discovery the existence of the bitcoins. However, wallets don't need to be of a name. Furthermore, in case a person uses a "brainwallet" tracing a bitcoin to a specific person becomes almost impossible through any conventional method. A brainwallet may be the use of a memorized passphrase so as to store a bitcoin.

The techniques for discovering hidden cash could be the first approach of any divorce lawyer for discovering a bitcoin asset protection plan. Unfortunately many, if not most, divorce lawyers and judges are not really acquainted with bitcoins and the fact that bitcoins may be used to hide assets. A divorce lawyer who doesn't understand bitcoins cannot possibly be likely to discover hidden bitcoin assets. Should you have any suspicion that your spouse might be hiding assets, make sure your lawyer understands the bitcoin system and how exactly to discover hidden bitcoin assets.