This Ain’t Your Grandma’s Divorce: Dissolution In The Digital AgePart I-Crypto Currency
As society moves forward into the digital age we are met with new challenges at each turn. Many problems can be solved by a new app or a quick internet search, but some issues require more specialized knowledge. On this blog post, we look at cryptocurrencies and the modern divorce.
Cryptocurrency is an online or digital medium of exchange with no physical presence and no centralized authority. Cryptocurrency is used to trade online for goods and services. Online currency, originally called ecash in 1983, has morphed over the years from something hiding on the darknet, to being accepted as legal tender in El Salvador and Cuba in 2021. Since 2009 over $7 trillion bitcoins have been exchanged. As cryptocurrency grows in popularity, it presents many challenges for the family law professional.
Due to its nature, cryptocurrency can be very hard to trace. It is a form of currency that is still unknown by many people even as it grows in use around the world. Part of the original idea behind creating a decentralized currency was to give more anonymity to users of online currency. While this presents challenges, there are still ways to find and determine the use and value of cryptocurrency in a dissolution matter.
Here are some key definitions to be aware of when discussing cryptocurrency:
Bitcoin: One of thousands of types of cryptocurrencies, Bitcoin is perhaps the most well-known and common form or cryptocurrency. Other popular cryptocurrencies are ethereum, cardano, dogecoin, tether, binance coin, and usd coin.
Exchange: a platform for buying and selling cryptocurrencies. There are hundreds of crypto exchanges. Much like a wallet, it is important to research and find an exchange that meets your needs and security requirements. Examples of exchanges are Coinbase.com , exchange.gemini.com and Binance.com.
Blockchain: The technology that is used to trade and track cryptocurrency exchanges. No personal information needed to enact the transfer, and this greatly increases security and anonymity. Your cryptocurrency “lives” on the blockchain until you enact a trade.
Crypto Keys: Passwords that are needed to transfer cryptocurrency. There are two kinds of keys that a person needs for an exchange: a private key, known only by the key holder/wallet owner; and a public key, which is an “address” that receives the requested transaction. The transaction is then unlocked with the private key.
Wallet: a digital means to store your access keys. Wallets are hosted on a variety of websites but be sure to research and ensure your wallet is with a trusted company.
If you were interested in purchasing cryptocurrency, you would first need to set up an account with an exchange, create a wallet and receive your private keys, and then use blockchain technology to trade for goods and services. This, of course, is a very basic explanation of the process, but provides a solid foundation for understanding how cryptocurrencies are procured and utilized. Now that we understand this new economy, let’s look at how we apply this knowledge in dissolution matters.
While the foundational tenet of cryptocurrency is to provide anonymity to users, there are still ways to find out if a spouse is using or holding cryptocurrency. In dissolution cases, each party has the right to know the assets of the marriage. In Oregon, ORS 107.089 outlines the minimum discovery documents that must be exchanged in a dissolution case. A Request for Production of Documents can also be used to obtain discovery that is outside of the scope of ORS 107.089. . Banking and other financial records are commonly requested going back a number of years. By carefully examining these financial records, we look for clues about other assets and accounts held by either party: transfers to or from unknown accounts, wire transfers, purchases and credits to business names associated with crypto currency, etc. If a party is unwilling to provide additional documentation for financial accounts, there are other legal tools we can use to get the documentation, including a subpoena duces tecum.
Subpoenas can be a powerful and relatively low-cost way to obtain discovery documents. In complex divorce cases, it may be necessary to engage the services of a forensic account or a digital forensic investigator.
Not only can a person purchase cryptocurrency, but they can also accept it as payment for any goods or services that they might offer as an individual or a business. There are several websites that holders of cryptocurrency can use to find people and businesses that accept cryptocurrency as payment for goods and services. Websites such as these can be searched to determine if a party in the dissolution case may be hiding assets or revenue by accepting cryptocurrency without informing their spouse. These websites include:
Advancements in technology will continue to affect our daily lives in ways we can’t imagine, but at Schulte Anderson, we continue to be one step ahead of the curve. If you have any questions or concerns, please reach out to us via our website or call us at 503-223-4131 for a consultation with one of our experienced family law attorneys.
Prepared by: Amy Turenhout, Paralegal
Schulte, Anderson, Downes, Aronson & Bittner, P.C.
November 18th, 2021