Crypto assets on divorce

Cosgrove Gaynard Solicitors

The division of assets on a divorce is one of the most contentious issues facing both couples and family lawyers. With the advent of digital assets such as cryptocurrencies lawyers are having to consider digital assets and their division in the dissolution of a marriage more and more frequently.

The division of assets on a divorce is one of the most contentious issues facing both couples and family lawyers.  With the advent of digital assets such as cryptocurrencies lawyers are having to consider digital assets and their division in the dissolution of a marriage more and more frequently. 

With the rising value and popularity of crypto-assets their importance in a divorce cannot be understated. The lawyers job has become increasingly more difficult and the must ensure that they have properly identified all their digital and crypto-assets.  Crypto-assets can include cryptocurrencies and tokens, digital manuscripts, musical recordings, artwork, photographs, online gaming accounts, online gambling accounts, online gift cards, Domain Names, social media accounts, prepaid accounts, Paypal, Revolut or similar accounts, and other digital assets such as virtual pets.

Crypto-Kitties

While the notion of a virtual pet such as a crypto-kitty might seem absurd their value must not be underestimated.  One such crypto-kitty sold for more than $100,000 on 2 December 2017 and the market cap of the crypto-kitty market place stands at nearly $6 million at the time of writing.  It with these valuations in mind lawyers dividing crypto-assets the lawyers must consider the two most difficult aspects. Firstly, their volatility and secondly their privacy and secrecy meaning crypto-assets are difficult to trace and hard to value.  Although parties have a duty to provide full disclosure of their assets in a divorce, the pseudo-anonymous nature of crypto-assets could potentially make them a safe haven for spouses wishing to hide their assets from spouse in a divorce.

Privacy

With divorces being acrimonious in their nature if one party decides not to disclose the true value of their holdings in a divorce, it serves to add time and expense to the proceedings. The lack of physical paper trail is a new phenomenon and something family lawyers have not had to deal with in the past.   Ideally family lawyers would enlist the help of a qualified technology lawyer to ensure their clients’ interests are protected and a proper audit of a partners crypto-assets can be undertaken, in more extreme cases a digital forensics expert can be brought in to search through the spouse’s email to determine what transactions have taken place.   Technology lawyers know that there are tools to trace crypto-assets. The difficulty is that some family lawyers do not necessarily understand crypto-assets and a lawyer needs knowledge of the asset you’re trying to get hold of.

Volatility

Valuing crypto-assets is not as straightforward as ordinary investments, such as property or shares, the constant change in value means valuations will need to me made at regular intervals throughout a divorce, with a valuation agreed upon on the date of the final hearing.  Potentially a fortune could be worth significantly less by the time the decree of divorce has been granted.  Another method in splitting the assets is to divide the number of assets and then each party takes on the volatility risk of their portion.

Irish Courts

As crypto-assets are a relatively new asset class the Irish Courts do not have a wealth of knowledge to draw upon and they are relying on lawyers to propose solutions to the various issues that arise.   The arsenal at the disposal of the Irish Courts to secure assets, such as injections, may be difficult to administer in the case of crypto-assets due to their decentralised and global nature.

Conclusion

In Ireland, by marked contrast to the most recent position in the US, the Central Bank of Ireland has confirmed that crypto-assets are not currently legally regulated.  Accordingly, it would appear that they do not fall within any traditional definition.  However, there are various sources confirming that there will be regulation brought in at a European level that will oblige member states to legislate for the regulation of crypto-assets, but for now, dividing the crypto-kitty may be as difficult as dividing

All news
Have you suffered an injury onboard an airplane?

Cosgrove Gaynard Solicitors set out what your rights are if you have been injured in the course of air travel.

Text Link
ePrivacy Regulation

A further regulation called the ePrivacy Regulation is being proposed to come into effect next year to further protect privacy in regard to electronic communications.

Text Link
Landmark judgment for the treatment of social media data in German court - digital assets

Landmark case for the inheritance of social media pages and other digital assets.

Text Link
Are Ethereum tokens a security?

It is really not for the SEC to determine whether tokens are security; this is to be determined by legislation or for the courts to determine. To date no court has determined whether or not tokens are deemed to be securities. That said it is clear that the SEC has interpreted the matter and are finding tokens to be securities. There is a case currently ongoing in New York which may however become the first court in the world to rule on whether or not tokens are deemed to be securities.

Text Link
Why ICO & Why ICO in Ireland?

Initial Coin Offerings (ICO's) are not just for technology companies . They are often the beginning of a digital revolution for existing Companies which are already established In their field whether it be healthcare, insurance, property or another industry. Despite some bad press, the tightening of regulation in jurisdictions such as in the US, and indeed Facebook and Twitter banning advertisements , money has been pouring into the ICO market with $3 billion raised through ICOs in the first two months of this year. This is half the value of all funds raised throughout 2017, according to Coindesk data.

Text Link