Cryptocurrency is fast becoming the preferred method for asset concealment during divorce. It is also a popular strategy for anyone who wants to launder money, conduct illegal enterprises, and much more. That being said, standard tokens may no longer be enough to completely shield marital property during divorce. New tracing methods have emerged, and specialized accountants can now help expose tokens through advanced forensic methods. In response to these challenges, spouses have been forced to consider even more complex methods. One of the most well-known strategies involves the use of a “cryptocurrency tumbler.”
What is a Cryptocurrency Tumbler?
Also known as a “cryptocurrency mixing service,” a crypto tumbler mixes tokens with others in order to hide their source. This service lumps together funds from multiple sources before distributing them back at random times. Theoretically, this improves the existing anonymity of cryptocurrencies and effectively makes specific coins almost impossible to trace.
While the owners of specific tokens are already anonymous, the blockchain is a public, transparent ledger accessible by anyone. This transparency provides the potential to trace funds, especially if spouses are willing to enlist the help of specialized forensic accountants who have direct experience with cryptocurrencies. A cryptocurrency tumbler could close this door of opportunity, making the public ledger useless as a tracing tool.
Although tumblers are perhaps most common for criminal money laundering enterprises, a certain percentage of users undoubtedly use this service to conceal assets during divorce. Although it is not clear how common this practice has become, various legal professionals mention this method in recent law articles. The real number of spouses who use this strategy will likely never be clear because, if successful, they remain completely hidden.
Tumblers Are Likely Only Viable if Spouses Remain Tight-Lipped About Their Tokens
When utilized correctly, tumblers can conceal assets more effectively than virtually any other modern technique. However, they are still vulnerable to certain flaws. First of all, a spouse who attempts this strategy may face difficult questions if they reveal their crypto activities at any point during the marriage. When someone becomes wealthy from crypto investing, they are often tempted to brag.
Perhaps they posted anonymously about their investments on a forum. Maybe they posted a description of their returns on social media. Whatever the case may be, these online activities may become clear during divorce. They may be subject to a court order that prevents them from changing their passwords or deleting any of their previous posts. If the other spouse’s lawyer becomes aware that a crypto investment might exist, it could expose the potential use of a tumbler.
In this situation, the concealment of the assets is somewhat inconsequential. The family court may subtract the value of the missing wealth from the spouse’s marital property, even if these tokens are never located.
Tumblers are Infamous for Scams and Law Enforcement Penetration
The world of crypto tumblers is a shady one. Operated and used by numerous criminals, it should come as no surprise that many of these services are associated with scams. In addition, it is rumored that many federal law enforcement agencies have penetrated crypto tumbler services – raising the potential of criminal consequences for spouses who attempt this strategy.
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