WILTSHIRE law firm Royds Withy King is acting on several high value divorce cases where spouses are seeking the disclosure and a potential share of cryptocurrency assets.

These are a first wave of cases that the firm is expecting.

The three all involve husbands that have invested in or have purchased cryptocurrencies, including Bitcoin, Litecoin, Ripple and Ethereum. These divorce cases raise significant challenges in valuing and tracing cryptocurrencies and could impact on the divorce settlements spouses can expect to receive.

Vandana Chitroda, a partner in the family team at Royds Withy King, said: “Cryptocurrencies have been with us since 2009 when Bitcoin was launched but have only recently become an issue for separating couples as awareness, values and media interest have soared.

“These are the first cases we have seen, and we expect to see many more. There will also be those divorces where a spouse may not have disclosed such assets leaving a traceability nightmare.”

Mark Phillips, another partner in the family team at Royds Withy King, said: “Cryptocurrencies have seen some individuals accumulate considerable wealth from a small investment, and the nature of these currencies make it very easy for one party to hide assets. Unless a spouse discloses an investment, it is entirely possible for them to remain hidden.

“Parties have a duty to provide full and frank disclosure of their assets during a divorce and if there is no disclosure or evidence of the existence of cryptocurrencies, it will be extremely difficult for a party to receive their fair share of the matrimonial assets.

“Tracing them could be enormously time-consuming and expensive. This is, of course, much easier if cryptocurrencies are traded via an online investment platform and bought with funds from a bank account, as the original value of the transaction can then be established. When cryptocurrency is purchased directly and moved offline, it becomes almost impossible to trace,” said Phillips.

And then there is the problem of valuation. Bitcoin hit a market high in December 2017 of US$20,000 but very quickly fell, standing now at around US$8,000. One of the cases on which Royds Withy King is advising involves an original investment of £80,000 in November 2016, which was valued at £1m in December 2017 and is now worth £600,000.

Chitroda said: “This presents a real challenge when valuing cryptocurrencies. Valuations will have to be carried out a number of times during the divorce process as the case progresses.”

And finally, lawyers and their advisers, like many of their clients, have little experience in recovering and valuing them.

Chitroda added: “We believe that cryptocurrencies will be a significant feature in a large number of divorces. Whilst cryptocurrencies are volatile, they are not going to go away. It is important that if you believe your husband or wife has invested in or purchased cryptocurrencies, such as Bitcoin, and you are separating, you tell your legal adviser.”