Five years ago, I had never heard of Bitcoin or NFTs. Now, we are valuing and distributing these assets in divorce matters.
Understanding hidden digital assets and divorce can be difficult. If you are getting divorced and believe that your spouse has or is hiding digital assets, you should speak to a Virginia divorce attorney immediately.
NFTs
If your ex is tech-savvy, he or she may be hiding assets in the digital world. NFTs (or “non-fungible tokens) are a digital asset that represent real world objects like music, videos, or art. They are part of the blockchain and are bought and sold online with cryptocurrency. Non-fungible means that the object is unique, like a one-of-a-kind piece of artwork. This uniqueness is verified via a digital signature.
NFTs are big in the crypto world. In fact, investors are sinking big bucks into NFTs to represent everything from memes and tweets to digital art and viral TikToks. The NFT market value for the second half of 2021 was over $2 billion.
NFTS as Digital Assets
When it comes to divorce, dividing marital assets can be tricky. This is especially true when you factor in digital assets. Unfortunately, it is very easy to hide digital assets. This is due to a few factors such as:
- Anonymity. Since NFTs and other digital assets exist in the crypto blockchain, there is a bigger opportunity for “secret” NFTs masking the owner’s identity. As with crypto currency, in divorces, discovering these assets can be more difficult.
- Smart Contracts. These actions are embedded in a smart contract and can include payment or royalties, selling once the NFT reaches a certain value, and agreements to create limited replications of the NFT for further sale. For example, a future licensing sale could be worth thousands, maybe even millions. If the presence of NFTs is discovered, it is important to investigate the smart contract pipeline.
- Gray Areas. Legally, it is not clear if NFTs will be treated as taxable securities, like cryptocurrency. This creates a gray area in finances. It can also give rise to the “sorry, I didn’t know I needed to disclose that” excuse should a sneaky spouse get caught with undeclared digital assets.
Is My Spouse Hiding Digital Assets?
If you are concerned that your spouse might be keeping digital assets a secret, watch for theses red flags:
- Bank accounts that show large singular cash withdrawals or a pattern of smaller withdrawals of similar size.
- The presence of crypto exchange apps or digital wallet apps.
- Following crypto and NFT accounts on social media.
- Secretive behavior with account statements.
Attorney for Digital Assets and Divorce
If you suspect that your spouse has hidden digital assets, it is important to speak to an attorney as soon as possible. Talk to your attorney about your concerns and the next steps for discovering digital assets. Contact Cook, Craig and Francuzenko to speak to an attorney about your case.
