In recent years, cryptocurrency has become a common and often complicated issue in divorce. These digital assets raise unusual challenges when spouses disagree about ownership, value, and full disclosure. Understanding how New Jersey courts handle cryptocurrency disputes is crucial for anyone going through the divorce process. To better understand your legal rights and options, continue reading and contact an experienced Bergen County property division lawyer at Feitlin, Youngman, Karas & Gerson today.
What is Cryptocurrency?
Cryptocurrency is a form of digital money. However, unlike the dollars you keep in the bank, it is decentralized. This means no single bank or institution controls it. Instead, it uses a digital ledger called a blockchain to track transactions. This record is secured using cryptography, making it very difficult to fake or change.
Crypto is typically stored in online exchanges and digital wallets. Popular examples include Bitcoin and Ethereum. People use crypto for investments, online purchases, and sometimes just as a way to send money directly to others without needing a middleman.
Why Does Crypto Create Disputes in Divorce Cases?
Cryptocurrency presents unique difficulties that often lead to disputes in divorce proceedings. The main issues revolve around transparency, access, and valuation, all of which are complicated by the digital and decentralized nature of the assets.
The most common reasons for disputes include:
- Unequal control: Oftentimes, only one spouse manages and has access to the digital wallets or exchange accounts. This makes it challenging for the other spouse and the court to confirm the total holdings.
- Fluctuating value: The value of cryptocurrencies can change drastically and quickly, sometimes by large percentages in a single day. This often leads to disagreements over the date of valuation for equitable distribution.
- Concealment: Digital assets are relatively easy to hide or fail to disclose during the financial discovery process, as they are not tied to traditional bank accounts or institutions.
- Incomplete documentation: Unlike traditional bank and investment accounts, transaction records for cryptocurrency holdings may be incomplete, preventing a full and accurate accounting of the marital estate.
Because these assets are digital and are not governed by a clear financial institution, they can be challenging to accurately assess and divide.
How Do Courts Handle Cryptocurrency Disputes in an NJ Divorce?
New Jersey courts address cryptocurrency disputes during divorce proceedings by using the principles of equitable distribution adapted to the unique characteristics of digital assets. The main goal is to ensure full disclosure and accurate valuation.
Judges typically order comprehensive financial discovery, which may require the crypto-holding spouse to provide credentials, transaction histories, and digital wallet information. When disputes over ownership or valuation arise, courts may rely on forensic accountants and blockchain experts. These specialists can track assets, verify ownership, and provide expert testimony regarding valuation on the date of distribution. If it is suspected that one spouse is hiding assets, the court has the authority to impose sanctions or other penalties against them.
Because this topic is so complex, it is highly recommended that you secure the help of an experienced legal professional today.
