If you are married, or have been in a de facto relationship for two or more years, the short answer is yes, as the Federal Circuit and Family Court of Australia has jurisdiction to alter property interests upon the breakdown of your relationship.
Cryptocurrency is property in which you have an interest, so it forms part of the property pool between you and your former partner that is available for division. The only way your ex would ‘get’ your cryptocurrency, would be if they sought Orders from the court for it to be transferred to them, or if it formed part of an overall property settlement between you. If you have insufficient cash or other assets to provide, you might need to sell your cryptocurrency to provide funds.
The court will not make someone take, as part of a property settlement, property that they don’t want. Similarly if both parties want the same asset, the court may simply order it be sold and proceeds of sale split.
Financial disclosure obligations for cryptocurrency
When negotiating a property settlement, you and your former partner are required by law to provide full and frank financial disclosure to each other about your financial circumstances and property in which you have an interest.
For cryptocurrency, to meet financial disclosure obligations, you would need to provide documentation including:
Description of each holding,
Current value of each holding,
Receipts of purchases and transfers,
Details of acquisition: purchase date and price, source of funds used to buy the cryptocurrency (for example, a transaction on your bank statement).
The value of cryptocurrency is relative to the type of documents required to be disclosed. If you have nominal holdings of a $1000 that you purchased after separation, it may satisfy the other party if you provide details of each crypto holding, number held, current market value, and source of funds for your purchase. If you had $50,000 of crypto purchased during the relationship or since separation and have lost substantial amounts, more disclosure will be required.
How is crypto valued?
Generally, you would adopt the present market value of your cryptocurrency, which can be as simple as googling the cryptocurrency and multiplying the value per unit by the number of units held – just like with stocks listed on the Australian Stock Exchange.
However, if your property settlement is in court, or you have sustained losses, the court may require more formal evidence identifying what cryptocurrencies are held, the value of holdings, and exchanges you have conducted.
Powell v Christensen  FamCA 944
In this case, the Balance Sheet identified about $100,000 of cryptocurrency, being the original investment purchases of $75,000 from the husband’s business, and $25,000 by the husband from a joint account with the wife.
The husband asserted the business holdings had a current value of $35,000-$38,000, and the personal holdings a value of $9,145. The wife sought that the original purchase prices be designated as the current value by way of add-back, due to losses sustained after separation and during the proceedings.
Disclosure and value issues
During the proceedings, the court ordered that the husband be restraining from dealing with or disposing of any property owned by him (aside from usual living expenses and day to day business operations). The husband claimed he did not think this meant he couldn’t trade crypto and did so.
The court also ordered the husband disclose documents about the Bitcoin he owned from May 2017 to date and documents about disposal of holdings. A subsequent consent Order required the husband to disclose all documents regarding acquisition and disposal of any Bitcoin investment or any other cryptocurrency investment.
The husband failed to comply with these orders, alleging there are no “official or certified statements” and that is all he thought he was required to disclose. He provided very few documents and what was provided included documents he created himself, produced from software, or accounting records of his business. He also tendered a report that was based on many of his self-authored information.
The documents he provided did not persuade the court of his asserted value of his cryptocurrencies.
What did the court do?
The husband conceded to the court that the transactions of his trading of the cryptocurrencies can be tracked, however, he did not provide disclosure documents of the ‘tracking’. He simply asserted that the initial acquisition price and current balances of each cryptocurrency in AUD were clear and disclosed.
The court made findings that the husband had breached of his disclosure obligations, breached orders for disclosure, and breached the restraint of dealing with property. The court relied on Weir in exercising discretion to ensure the wife, who was an innocent party to the husband’s deliberate non-disclosure, was not unduly prejudiced, and accepted the $75,000 and $25,000 value of the crypto holdings by way of an add-back.
It is important to comply with disclosure obligations, as a failure to do so can result in findings against you and the other party’s value being accepted by a court. If you have any questions about a property settlement, please contact our family law team.
*Disclaimer: This is intended as general information only and not to be construed as legal advice. The above information is subject to changes over time. You should always seek professional advice before taking any course of action.*
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