Dirty divorce goes digital as cryptocurrency helps spouses conceal assets

Financial disclosures in a divorce are a veritable minefield as anyone battling an ugly break-up knows.

Fighting over assets is, by far, one of the most destructive aspects of a split and while any good lawyer will advise their client that a "full and frank disclosure" is necessary not to mention required by law; what's advised, and what actually happens, are often poles apart.

As anyone who has contested a divorce will contend, fairness isn't something that's regularly practiced when it comes to acrimonious break-ups.

And what's more while both parties should, by law, receive their fair share of joint assets built up through a marriage – getting to the bottom line can be tough; especially when it comes to complex investment strategies and furious arguments over who owns what.

The Office for National Statistics reports there were 106,959 divorces of opposite-sex couples in the United Kingdom in 2016, an increase of 5.8% compared with 2015 and what's more: the majority of divorces of opposite-sex couples in 2016 where a decree absolute was granted, were petitioned by the wife (61%).

Coincidentally, the rise in divorce comes at exactly the same time a new perceived asset concealing villain has exploded on to the landscape and one that lawyers are desperate to get their claws into.

Enter stage left: cryptocurrency and with it all the drama that's likely to be gleaned from a market experiencing wild west conditions.

Cryptocurrency is revolutionary but, the theory that the unregulated market can help those with malevolent plans hide their true assets from the taxman or in this case their soon-to-be insignificant other, is something that's creeping into the legal landscape.

But make no mistake lawyers know every trick in the book when it comes to tracing money that's mysteriously vanished from a jointly owned marital marriage book.

And then there's the theory that loose lips sink ships, with those who've made big gains from investing in crypto unable to contain their glee.

Indeed, while the digital currency may be sitting in a hot or cold wallet depending on preference – any attempt to turn it into fiat currency can well and truly be traced, as any lawyer with the instincts of a bloodhound will tell you.

There's no question that cryptocurrency ownership is something that's certainly causing lawyers headaches.

From property to capital gains to tax and now divorce – its appearance in the mainstream is agenda setting.

So much so that one leading London law firm says it has three cases before the English courts involving potentially hundreds of thousands of pounds worth of the currency.

Royds Withy King is advising three cases involving assets made up of cryptocurrency which have rocketed in value and which are almost impossible to trace thanks to the anonymity of the decentralised network.

Meanwhile at Investoo Group, we are approached daily by clients who are changing their attitudes to investing.

Gone are the days when individuals decided to pour everything they owned into bricks and mortar, share certificates or safe haven assets like precious metals.

Investors' appetites are changing and, like divorce, they're certainly more risk-on than ever before.

Nowadays digital currency or cryptocurrencies like Bitcoin and Ethereum are well and truly at the forefront of people's minds as they look to diversify their investment strategies.

And while the majority of people have an understanding of how the decentralised blockchain technology has the potential to change the world; there's a tiny minority who no doubt will aim to use the market as a means to their own ends.

From our own research and on the ground intelligence clients are mixing up their investment portfolios and while crypto is still a minnow compared to equities, stocks, foreign exchange and securities; there's no question the high-yielding naughty schoolchild in an underdeveloped market has exponential growth potential.

Last month we learned that young people are by far the most willing to take their hard-earned cash and plonk it in a crypto portfolio – meaning the future is definitely showing signs of prosperity.

Investoo Group's You Gov poll also showed that more men (9%) than women (6%) were interested in dipping their toes into the market.

But when it comes to divorce, it's important that those who may not have been entirely honest with their other half don't assume that a crypto investment will ensure that their cash can't be found.

Firstly contrary to common misconceptions, any attempt to hide money through a crypto investment and not declare it is, in fact, illegal and puts those who attempt it at risk of breach of civil and criminal penalties.

Courts deal with the division of finances separately from the divorce itself and therefore each party will be expected to provide 12 months' worth of bank statements for each bank account and all investments they hold, as well as property valuations, pensions statements and documents regarding their income.

So even if the differences in a marriage are irreconcilable, honesty is more than certainly the best policy, and will keep anyone who follows that basic rule on the right side of the law.

David Merry is the CEO and Chairman of Investoo Group, one of the world's leading cryptocurrency, FX, shares and derivative trading education firms. Investoo Group operates more than 20 global brands, including brokerage firm Cryptogo.com and industry specific news websites; including Coinlist.me and German language site Bitcoinmag.de.