The dispute drags on
In the eight-year divorce process, almost as long as the marriage, the wealthy San Francisco couple did everything to win their favor. They dispute over child support, profits from her husband’s software company, and the fate of their $3.6 million home.
However, the most intense court battle between Mr. Francis deSouza and his ex-wife Erica was over a multi-million dollar Bitcoin loss. Mr. deSouza is the CEO of biotech company Illumina, who bought over 1,000 Bitcoins before separating from his wife in 2013. But then that investment lost almost half of the money when the exchange delivered. Popular cryptocurrency exchange, Mt Gox, collapses.
After three years of litigation, in 2020, a San Francisco appeals court ruled that the husband failed to properly disclose certain elements of his crypto investments, while the inherent value was very volatile. sick. The court ordered him to give deSouza his remaining Bitcoins worth more than $6 million.
In legal circles, the deSouzas case is perhaps known as the first major Bitcoin divorce in history. Such marital disputes are increasingly common as cryptocurrencies become more widely accepted. Accordingly, the division of family assets has become a major controversial factor, husband and wife accuse each other of cheating in transactions and poor financial management.
A divorce is said to be bad when two parties argue about almost everything. What’s more, the difficulties in tracking and valuing cryptocurrency, a digital asset traded on a decentralized network, make everyone’s headache even more. In many cases, divorce lawyers said that if a spouse intentionally declares less assets or hides money in an electronic wallet, it is difficult to find out.
Jacqueline Newman, a New York divorce attorney who often works with wealthy clients, said: “From hiding money under a mattress, then to a bank account in the Caymans. Now, they upgrade to concealment. crypto-assets”.
In fact, many people own millions of dollars in cryptocurrency but hide it from their spouses so that when they divorce they will not be divided like normal property. Sandra Radna, a divorce attorney in Long Island, New York, said: “A client of mine has a husband who owns more than $1 million in his account. But he said he only had the account. retirees $ 200,000. The wife knows that her husband has a larger fortune than that, but does not know where he keeps it.”
In addition, the development of cryptocurrencies has provided a useful medium of exchange for criminals, creating new scams. But digital assets are not untraceable. Transactions are recorded on a public ledger known as the blockchain, which allows savvy analysts to track cash flows.
Some divorce lawyers have had to rely on forensic science (the application of science to criminal and civil law), people in this industry are paid tens of thousands of dollars to monitor the movement of currencies. cryptocurrencies like Bitcoin and Ether from online exchanges to digital wallets.
Forensic science analyst Paul Sibenik said that investigative firm CipherBlade has studied around 100 crypto-related divorces over the past few years. In some cases, he managed to track down more than $10 million in cryptocurrency that a husband had hidden from his wife.
The court found that Mr. deSouza, 51, had violated the rules of divorce proceedings by not fully informing his ex-wife of his crypto investments. The court ordered him to give Ms. deSouza about half of all the Bitcoins he owned before Mt Gox went bankrupt, leaving him with only 57 Bitcoins, worth about $2.5 million at today’s prices. His wife’s Bitcoins are now worth more than $23 million.
Not all crypto divorces involve such large sums of money. A few years ago, Nick Himonidis, a forensic science investigator in New York, took over a divorce case in which a woman accused her husband of lying about the amount of cryptocurrency he held.
With the court’s permission, Mr. Himonidis went to the husband’s home and searched his laptop. He found a digital wallet, containing about $700,000 in Monero cryptocurrency. Mr. Himonidis recalls: “He was like, ‘Oh, that wallet? I don’t think I have that.’ I just shut up.”
In another case, Mr. Himonidis said, he discovered a husband had moved $2 million in crypto out of his account on the Coinbase exchange (a platform that helps people buy, sell and store money). digital currency). A week after his wife filed for divorce, the man transferred the money to a digital wallet and then left the US.
However, these cryptocurrencies are constantly volatile, making investments not always profitable. One husband admitted to having made a big loss. “I hid my wife’s investment in Bitcoin and lost. I swear, this is more stressful than the upcoming divorce,” the man expressed.
The court can order a cryptocurrency exchange to refund. But investors often store funds in digital wallets that are not subject to any centralized control, as access requires a unique password generated by the wallet’s owner. Without that password, the husband’s funds are completely out of reach of the ex-wife.