“Asset Protection” has long been a strategy for divorce cases across the United States. The term “asset protection” refers to the use of legal strategies to hide and block the assets of the court. The relatively new Internet currency, Bitcoin, is likely to be the next frontier of asset protection. In divorce cases, asset protection can take many forms. Complex asset protection techniques involve transferring funds to overseas accounts, forming legal entities (trusts, companies, limited liability companies) and other methods.
The simplest and simplest form of asset protection, sometimes the most common form of divorce, is to deposit money in cash (ie in a family safe or in a bank safe). In this way, the divorced person thinks he can “protect” the cash from the dispute process. A divorced spouse can keep his spouse, divorce lawyer and court cash confidential to avoid being ordered to share cash with his spouse. This strategy may or may not be successful, but it is certainly not legal because it requires the person to distort his assets to his spouse and court. A mature divorce lawyer will know how to hide such hidden assets by reviewing financial records and other legal discoveries. However, Bitcoin has the potential to replace hidden cash as the most common form of asset protection in divorce cases. Given the structure of the Bitcoin system and the fact that most disputed lawyers ignore Bitcoin, it may become a more successful method than hiding cash.
Bitcoin is a digital currency created by anonymous developers called Satoshi Nakamoto in 2009. It is a currency that exists only in digital form. All Bitcoins and transactions are registered on the Bitcoin blockchain and updated by Bitcoin users rather than centralized authorities. However, the transaction does not include a name, but a digital identifier for each bitcoin. The Bitcoin owner saves Bitcoin in the Bitcoin wallet. A wallet is not necessarily a physical wallet, but rather a variety of methods for storing a digital identification of bitcoin. The wallet may be stored on a computer, on a server on a Bitcoin wallet website, or even on a piece of paper.
Although it is theoretically possible to track the transfer of bitcoin by examining the blockchain, only the public identification key of the bitcoin can be found instead of the owner’s name. If the wallet is stored on a personal computer or website (the party in dispute has registered his name), it is possible to discover the existence of Bitcoin. However, the wallet does not have to be associated with a name. In addition, if a person uses a brain wallet, it is almost impossible to track bitcoin to a specific person by any conventional method. The brain wallet uses a commemorative password to store bitcoin.
Finding ways to hide cash will be the first way any disputed lawyer discovers a Bitcoin asset protection program. Unfortunately, many, if not most, divorce lawyers and judges are not familiar with the fact that Bitcoin and Bitcoin can be used to hide assets. Divorce lawyers who don’t understand Bitcoin can’t expect to hide hidden Bitcoin assets. If you suspect that your spouse may be hiding assets, make sure your lawyer understands the Bitcoin system and how to discover hidden Bitcoin assets.