Division of marital property: Crypto assets

With the development of digital technologies and the growing popularity of cryptocurrencies, the issue of dividing crypto-assets during divorce is becoming increasingly relevant in Ukraine.

Divorce in itself can be a complex process, and adding to it crypto-assets, which have a high level of anonymity and volatility, creates additional legal challenges.

Today we will look at the main aspects of dividing crypto assets in a divorce, as well as the key problems that can be faced bump parties in the process.

Crypto assets as an object of division

According to the Family Code of Ukraine, all property acquired by the spouses during marriage is jointly owned. This rule also applies to crypto-assets if they were acquired during the marriage. Despite the fact that cryptocurrencies do not yet have a separate legal regulation in Ukraine, the courts are already beginning to consider them as assets subject to division.

The main cryptoassets that can be the subject of litigation in the division of marital property fall into two key categories.

1. The first is cryptocurrencies that function as digital means of exchange, such as Bitcoin (BTC) and Ethereum (ETH), stablecoins pegged to fiat currencies such as Tether (USDT) and USD Coin (USDC), and a wide range of altcoins. As a general rule, they are considered as property subject to distribution.
2. The second category is NFTs (non-fungible tokens), which are unique digital assets based on blockchain technology. The value of NFTs can be highly volatile and depend on factors that are difficult to estimate using traditional methods.

Features of the division of cryptoassets:

• Determining the value of cryptocurrencies.
  One of the main challenges when splitting cryptoassets is determining their value due to high volatility. Cryptocurrencies can change their price significantly in a short period of time, making it difficult to divide fairly. It is important to establish the market value at the time of division or to agree on a certain period of time to fix the price.
• Hiding assets.
  One of the main problems when dividing crypto-assets is the possibility of one of the spouses hiding them. Since cryptocurrencies can be stored in “cold” wallets (hardware wallets) or in cryptocurrency exchange accounts, proving their existence can be a difficult task. In such cases, it is necessary to engage specialists to conduct investigative actions, analyze blockchain transactions or use data from crypto exchanges, if any.
• Processing of documents. Court decisions on the division of cryptoassets are based on general provisions on joint ownership. In such cases, it is importantto provide documents, confirming the ownership of cryptoassets, for example, data from exchange accounts or confirmation of transactions in the blockchain.
• Compensation instead of physical separation. If the physical division of crypto-assets is not possible or the parties do not wish to receive cryptocurrencies, the court may award monetary compensation instead of a share in crypto-assets. This may be relevant in cases with NFTs or if one spouse does not have access to cryptocurrencies.

How to prove the existence of cryptocurrencies?

If one of the spouses hides crypto assets, there are several ways to prove their existence:

1. Involvement of specialists: Specialists can analyze transactions in the blockchain, which will allow tracking the flows of cryptocurrencies. There are often situations when assets are not displayed on the wallet, but are in a hidden format in any De-Fi protocol. We will help you approach this issue comprehensively and identify hidden assets.
2. Requests to crypto exchanges : If cryptocurrencies are held in exchange accounts, balance and transaction information can be obtained through official requests. However, we presume that there may be difficulties in providing such answers or legal qualifications of data requests.
3. Documentary confirmations: Declarations, bank statements or other documents that confirm the purchase of cryptocurrencies during marriage can be used as evidence in court.
4. Construction of the scheme of flow of funds: Users can use different transaction schemes to hide assets on the balance sheet. Using specialized tools, teams and Prikhodko&Partners conducts blockchain analysis to track the movement of funds between different addresses. Based on the collected information, a visual diagram of the flow of funds is created for detection of hidden cryptocurrency.

Dividing crypto assets in a divorce is a complex process that requires a careful legal approach and technical expertise. Given the instability of the value of cryptocurrencies, the possibility of their concealment and the difficulty of accessing crypto wallets, it is important to prepare in advance for such cases by gathering as much evidence as possible and involving crypto experts.

How can a lawyer help with the issue of the division of crypto-assets during a divorce and division of marital property?

A divorce involving the division of cryptocurrencies is becoming increasingly difficult due to the specifics of these assets. A lawyer who specializes in family law and has experience with crypto assets can provide significant assistance at every step of the process.

The lawyer will help identify the crypto-assets to be divided and assess their legal status according to the current legislation. The Family Code of Ukraine does not have a separate provision on cryptocurrencies, but they can be recognized as property subject to division. A lawyer will ensure the correct qualification of crypto-assets as joint property of the spouses.

If one of the spouses hides the presence of cryptocurrencies, a lawyer can organize a search for evidence.

This may include:

• Collecting information about transactions through the blockchain.
• Blockchain analysis to track the movement of funds between different addresses.
• Construction of a visual scheme-confirmation of the presence of crypto-assets
• Submitting requests to crypto exchanges for balance information.
• Organization of cooperation with and specialists, which specialize in detecting hidden assets.

Cryptocurrencies have high volatility, so their valuation is an important step in the fair division of property. A lawyer can engage financial experts to determine the current value of cryptocurrencies at the time of litigation, taking into account all risks.

A lawyer will help develop a strategy for the division of cryptocurrencies.

It can be:

• Physical separation of any type of cryptocurrency (Bitcoin, Ethereum or USDT), if the parties have access to crypto wallets.
• Monetary compensation in cases where one of the spouses does not have access to crypto-assets or does not wish to receive cryptocurrency.

The lawyer will represent the client’s interests in court, providing evidence, arguments and developing a legal position to achieve the best result. Family cases involving the division of crypto-assets can be quite complex, so a qualified lawyer can ensure that the client’s rights are properly protected.

The lawyer prepares all the necessary documents for submission to the court, including lawsuits, requests to crypto exchanges and other procedural documents. It is important to have clear documentary evidence of ownership of assets, which is the basis for division.

When providing the service, our team adheres to all principles:

1. Legality: Performs all actions are changing within the framework of current legislation.
2. Ethics: Compliance with professional ethics and confidentiality.
3. Accuracy: Ensuring high accuracy of analysis and conclusions.
4. Objectivity: An unbiased approach to investigation.

If you are faced with the issue of dividing crypto assets during a divorce, contact a qualified lawyer to assess the situation and determine a strategy to protect your rights.

We will ensure a fair distribution of digital assets, guaranteeing reliable protection of your rights in this complex legal process.