Valuing Personal Property During Divorce: Non-Fungible Tokens, Cryptocurrency & Other Challenges
Divorce is never fun. Often, the decision comes after many months or years of conflict and multiple unsuccessful attempts at reconciliation. However agonizing this process may be, it has one silver lining: it gives you time to get your ducks in a row. In the modern, increasingly digital, and increasingly complex world of asset management, this is crucial because working out how to divide evermore popular new types of assets—such as cryptocurrencies and non-fungible tokens (NFTs)—requires foresight and planning.
Wait, I’ve heard of cryptocurrencies…but what are NFTs?
The fact that so many people will be asking this question is the precise reason NFTs make divorce especially tricky. Few people understand NFTs, and fewer still know how to appraise and manage them, which makes them an excellent vehicle for squirreling away assets ahead of an anticipated split.
A non-fungible token, or NFT, is a digital certificate that cannot be duplicated which asserts that an individual owns a particular item. They are useful because they resolve the problem of how to commodify digital files that may otherwise be infinitely replicated. Founder of Twitter Jack Dorsey, for instance, recently sold an NFT of the first-ever tweet made on the platform for $2.9 million, meaning that yes, NFTs can be valuable—very valuable.
But why buy an item that can be easily replicated?
Simple: bragging rights. It’s the same reason Leonardo da Vinci’s paintings sell for millions when prints can be easily and cheaply manufactured. NFTs provide a mechanism by which collectors can own iconic pieces of contemporary culture and therefore also represent an investment opportunity. In addition, because they are stored in digital wallets secured on the same blockchain technology as cryptocurrencies, their ownership is easy to hide.
Both cryptocurrencies—such as Bitcoin or Ethereum—and NFTs represent valuable assets that exist outside of traditional financial institutions. This is why they are both a risky investment and a tempting vehicle for hiding any assets a person does not want to lose in a divorce.
How can I protect myself from such tricky behavior?
Just as you would bring in an expert appraiser if fine art accounted for a portion of your family assets, so too do you want to involve a tech expert in any divorce proceedings that involve cryptocurrencies or NFTs. After all, no matter how capable your divorce attorney may be, chances are they do not know how to track a series of e-transfers to a currency exchange sent to a digital wallet turned NFT art gallery.
At Lazor Rantas, PC we ensure your case receives the detailed care it deserves no matter its complexity. We have wide-ranging experience working with high net-worth individuals, we are familiar with all kinds of complex assets and are prepared to ensure you receive your fair share regardless of your family’s wealth structure.