Cryptocurrency, Blockchain and Family Law

By Steven Ram posted 01-11-2021 18:51

  


By Nithini Perera


Jonty Simmons is a senior lawyer at Melbourne Law Studio. His areas of expertise include commercial, wills and estate, family law, property law amongst many others. He is driven by his curiosity of changing developments in the law, as well as his desire to share the knowledge he has acquired over the years with others. We sat down with Jonty to discuss one of the most relevant advancements in the world of digital currency- cryptocurrency, blockchain technology and how these new developments pose a new issue in family law.

What is Cryptocurrency?

Cryptocurrency is a form of digital currency. Unlike regular forms of currency that we are familiar with, cryptocurrency is not distributed by a bank- instead, it relies on decentralised networks which we often refer to as blockchain technology.

Bitcoin is just one of the many types of cryptocurrencies that relies on blockchain technology along with Ethereum and meme-coins like Doge and Shiba Inu.

As there is no need for a third party such as a bank to exchange crypto, it is seen to be a democratising force that levels the playing field, allowing almost anyone with a digital device to participate in its exchange. However, it is this very decentralised nature of crypto and its volatility that may pose many challenges when we deal with cryptocurrency.

Disclosing Financial Information and Cryptocurrency

Gaining accurate and truthful financial disclosure from the other party in a family law dispute can be one of the most difficult tasks lawyers often engage in, especially if the other party doesn’t want to provide it. Whilst this is often a concerning aspect when determining tangible assets of people who don’t want to disclose, Jonty foresees this process will be made even more difficult when it comes to digital assets, such as cryptocurrency.

Although bank accounts can be directly subpoenaed, there is no such third party that may help us with the tracing process of cryptocurrency. Jonty views the issue as similar to the problems posed with cash, but with the added difficulty of tracking it down in a digital space. ‘It can be difficult to even prove that crypto was purchased by your partner, let alone track it’ says Jonty when acknowledging the complexity of the process.

‘Unless you know your partner’s wallet address, whether they actually still own that wallet, and whether they have other wallets that they may have transferred to, it’s very hard to find any information about their transactions’.

As the value of cryptocurrency can fluctuate erratically on a day-to-day basis, this provides another challenge when determining what parties may be liable for in a financial split.  Jonty states that this adds ‘another layer of complexity’ to these matters as it means parties can potentially hide their entire wealth and deceive their partner if their legal representatives aren’t savvy about these new developments.

How Can We Face these Challenges?

According to Jonty, ‘it is key that the other party is willing to cooperate’. Jonty believes that trust between parties is a huge aspect of both the development of cryptocurrency as well as navigating its legal challenges. Having eliminated the third party of a bank, cryptocurrency relies on an anonymous source (and oftentimes a network of sources) providing that trust instead.

Similarly, during family law matters, it is important that parties are honest and open with each other. Jonty also believes that clearly outlining a couple’s financial plans early on, especially in terms of cryptocurrency, is crucial to avoid some of the worst aspects of complex and emotionally draining proceedings.

Furthermore, knowing whether your partner has digital, or hardware wallets is the first step. Transactions on major blockchains such as Ethereum, so it is easier to track transfers. The difficulty, Jonty says, is that you may never know how many wallets your partner has. Furthermore, Non-Fungible Tokens (digital art or tokens known as NFT’s) could be worth thousands, if not tens of thousands and partners are often entirely unaware that their significant other has a digital artwork or currency hoard in their back pocket.

Therefore, it is vitally important to discuss these with your partner during the relationship and arrange a potential contingency plan. However, regardless of the situation his clients find themselves in, Jonty is committed to providing them with a highly individualised service that provides them with the peace of mind of being looked after in complex legal proceedings.

Jonty highlights the importance of having open and honest conversations with his clients and building their trust as they navigate these complex matters. As a result, clients often have a trusted partnership they can depend on and return to Melbourne Law Studio for the rest of their legal needs.

Melbourne Law Studio

In a time where everything is advancing so quickly, Jonty’s eagerness to share his knowledge and thoroughly educate his clients is refreshing to see. Jonty believes that the only way we can keep up with modern advancements is by sharing our knowledge with each other instead of ‘gate-keeping’ it.

This sharing of information is a key aspect of the service he offers at Melbourne Law Studio, whose philosophy is “Genuinely Helpful”. - Jonty concludes by sharing the guiding principle behind his work: ‘we want to explain matters to our clients so clearly, they feel like they can do it themselves. We always do what’s best for the client and that’s why we’ve seen such a strong uptake in clients from word of mouth over the past year.

With new developments, it’s important to seek trusted professionals who are excited to learn about the future of digital assets, as well as acknowledging ‘old school’ principles of honesty and fairness’.

Do you need legal advice?

For legal advice regarding Cryptocurrency, Blockchain and Family Law you can choose a complimentary call back from Ines Brcic at Melbourne Law Studio.

This Featured Article does not constitute legal advice or a legal opinion on any matter discussed and, accordingly, it should not be relied upon. It should not be regarded as a comprehensive statement of the law and practice in this area.

If you require any advice or information, please speak to a practising lawyer in your jurisdiction. No individual who is a member, partner, shareholder or consultant of, in or to any constituent part of Legally Yours Pty Ltd accepts or assumes responsibility, or has any liability, to any person in respect of this article.

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