that could tie you to the transaction, so following a paper trail would be impossible. Furthermore, liquidity aſter the divorce proceedings would be far more simple than trying to sell an expensive piece of art or furniture.” The writer, Charlie McCombie, a UK-based author and editor

for the website, argued that even if a person’s crypto-assets were discovered, “a solicitor would have a very hard time tying you to the address, provided you showed due diligence; and although I couldn’t find a source on this, given that in most countries and in most US states, since Bitcoin’s value isn’t technically recog- nized, you could argue the case that they don’t have any value. The only obvious downside to hiding assets through Bitcoin is the well-known volatility of its price. You could potentially lose huge sums if the market wasn’t in your favour, but on the other hand, you could get lucky, and even make a profit.”

“I haven’t seen people using Bitcoins to conceal assets yet in my divorce financial planning practice, but I fear I will soon” Two years earlier, Robert Pagliarini, the president of

California-based Pacifica Wealth Advisors and the author of The Six-Day Financial Makeover: Transform Your Financial Life in Less Than a Week, posted an article on that claimed “the newest high-tech way to hide assets in a divorce is by using Bitcoin, a digital currency that doesn’t depend on banks or gov- ernments, and allows its holders to remain anonymous. I haven’t seen people using Bitcoins to conceal assets yet in my divorce financial planning practice, but I fear I will soon.” But what if McCombie’s warning that Bitcoins could lose

their value came true? Based on a Reuters article on BNN in November 2017, the reality might just be the opposite. “Digital currency bitcoin rocketed above US$7,000 for the

first time ever on [November 2], after a more than sevenfold increase in its value since the start of the year,” it reported. “Bitcoin has seen eye-watering gains in recent months and has more than doubled in value in the past seven weeks alone. It hit as high as US$7,066.44 on the Luxembourg-based Bitstamp exchange [that day]. The latest rally was driven by news earlier this week that the world’s largest derivatives exchange operator CME Group is to launch Bitcoin futures. “The price move takes Bitcoin’s aggregate value, or ‘market

cap’ — its price multiplied by the number of Bitcoins released into circulation — to more than US$117 billion, according to industry website Coinmarketcap. The aggregate value of all

cryptocurrencies is now at a record high of more than US$190 billion, the website said.” For those raised on trusting traditional currency systems, the concept of a digital currency must seem like science fiction. But when Forbes magazine wrote about it in a May 2017 article — “Bitcoin is Bigger Than Ever, and Here’s Why That Matters” — it seemed as though the cryptocurrency had achieved a certain credibility in the financial world. (It should be noted there are many other cryptocurrencies. Wikipedia says that as of July 2017 the number was more than “900 and growing.”) A few months later, Forbes reported on comments made by

Jamie Dimon, CEO of JP Morgan Chase, who had recently labelled Bitcoin as a “fraud,” likening it to the 17th-century tulip-bulb mania and adding that he would fire any employee caught trading it. “But on October 2 [2017], the Wall Street Journal reported that rival Goldman Sachs is considering trading in cryptocurrencies, potentially the first Wall Street firm to do so.” Divorce lawyers and forensic investigators need to be aware

that this high-tech option could possibly be employed by a spouse trying to hide assets. But even if this is the case, they should not assume the perpetrator can’t be caught. Centeno described Bitcoin as being pseudonymous “because although users are assigned a string of numbers as a Bitcoin wallet address where they store their Bitcoins, with some foren- sic work these addresses can be associated with the users’ actual identity and therefore tracked.” To protect yourself from being “Bitcoined in divorce,”

Pagliarini wrote on, you have to follow the money trail. “Conversions of ‘real’ assets into digital Bitcoin would leave clues. There would be transfers from bank accounts you could track. Once the transfers were made, however, it would be diffi- cult — especially if the Bitcoins were held outside of the United States — to prove ownership. Your first step would be to show that marital property was converted into Bitcoins and hope a court could compel your spouse to reveal their true value. “Things become more difficult if your spouse has a business,

and was compensated in Bitcoins without any invoice. In that case, there would be no record of the transaction — either on a profit and loss report from your husband’s company or in bank records. To uncover this will take effort and craſtiness.” It’s likely that Sharon Bowman is relieved that her ex-husband

either didn’t know about Bitcoins or chose another method to try to convince the courts he didn’t have the assets she claimed he possessed. If he had, he might not have ended up in jail. As it is, it seems he probably bit off more than he could chew.

DAVID MALAMED, CPA, CA•IFA, CPA (ILL.), CCF, CFE, CFI, is a partner in forensic accounting at Grant Thornton LLP in Toronto (linkedin. com/in/forensicaccountant)


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