Digital assets present a unique set of challenges to family law proceedings. For decades, courts have recognized the value in digital assets like photos and animations. But recent years have seen an explosion in the types and values of digital assets, from cryptocurrencies like Bitcoin and Ethereum to nonfungible tokens (NFTs). As of 2021, it is estimated that 20 million Americans hold cryptocurrencies, a market worth $2 trillion.
Although neither Wisconsin appellate courts nor Wisconsin statutes have expressly considered the unique challenges that digital assets pose to legal proceedings, it is inevitable that the law will have to contend with these novel issues as more people come to recognize and own digital assets. Until the state establishes statutes that specifically address the particularities of digital assets in legal proceedings, attorneys and courts will need to adapt existing practices to this new frontier.
Wis. Stat. §767.127(1) requires parties to furnish full disclosure of all assets in all actions affecting the family. This disclosure must include all financial interests including cryptocurrency, and failure to provide complete disclosure constitutes perjury. A subsequent section, §767.61, addresses the division of property in annulments, divorces, and legal separations. All property–including intangible property like Bitcoin–acquired prior to and during the marriage must be divided.
Even if all digital assets are properly disclosed, challenges unique to digital assets remain. Like traditional assets, the value of cryptocurrencies and other digital assets such as nonfungible tokens (NFTs) can rise and fall over time due to changing economic circumstances. For example, the price of a single Bitcoin rose tenfold between March 2020 and March 2021, from about $6,000 to about $60,000. By July, that price had dropped to around $25,000. Such fluctuations can add substantial complexity to divorce or estate proceedings.
If a person in a divorce proceeding suspects that his or her spouse is hiding digital assets, attorneys may be able to file a subpoena to access the spouse’s records or electronic devices. There are a number of ways that hidden assets can be discovered: for example, email records may show receipts for cryptocurrency exchanges, and bank statements may show evidence of fund transfers.
Due to the novelty and difficulty of discovering, assessing, and litigating digital assets, it is imperative that your legal counsel is informed, and has access to up-to-date experts in cryptocurrency. Wessel, Lehker, & Fumelle is prepared to assist you with your digital assets. Contact us today for a free consultation.