Do you know South Korea recognises cryptocurrencies as part of marital assets in divorce proceedings?
This clarification comes from IPG Legal, a law firm specialising in South Korean law, which highlights that both tangible and intangible assets can be divided during a divorce according to the country's legal framework.
The firm emphasised,
“Under Article 839-2 of the Korean Civil Act, either spouse may request a division of marital assets accumulated during the marriage upon the divorce in Korea.”
The recognition of cryptocurrency as property stems from a pivotal ruling by the Supreme Court of South Korea in 2018.
The court confirmed that cryptocurrencies and virtual assets are classified as property due to their economic value as intangible assets.
This ruling solidifies the understanding that any cryptocurrency acquired during the marriage forms part of the marital estate.
Consequently, spouses aware of their partner’s cryptocurrency holdings can request a “fact-finding investigation” through the courts to determine the value of these assets.
Tracking cryptocurrency investments can indeed be more straightforward than traditional cash transactions.
Blockchain technology ensures that all transactions are preserved, providing a transparent record that is resistant to external alterations or deletions.
This traceability allows for greater investigative capabilities.
For instance, bank withdrawal records combined with forensic investigations can unveil previously hidden cryptocurrency assets.
In cases where one spouse suspects that the other has hidden cryptocurrency, courts can take decisive actions.
If a spouse knows which cryptocurrency exchange is being used, the court may issue a directive to obtain financial transaction records to verify holdings.
For those unaware of the specific exchanges, analysing bank withdrawal records can lead to significant discoveries.
These investigations may also employ creative forensic techniques to trace transactions related to cryptocurrency exchanges, ultimately helping to identify undisclosed assets.
When it comes to dividing cryptocurrency during divorce proceedings, two primary methods emerge: liquidating the assets or dividing them directly.
Spouses may opt to liquidate the cryptocurrency at its current market value, thus splitting the proceeds equally.
Alternatively, they could choose to divide the cryptocurrency itself, allowing each partner to retain portions based on the prevailing valuation.
The decision on which method to pursue should consider the inherent volatility of the cryptocurrency market and the potential for future appreciation or depreciation.
In many instances, negotiations lead to inventive solutions that address both parties' interests in a fair manner.
As cryptocurrency becomes more embedded in financial dealings globally, instances of divorce cases involving digital assets are on the rise.
For example, during a recent divorce in New York, a wife hired a forensic accountant to investigate her husband's financial dealings.
She discovered that her husband had failed to disclose 12 Bitcoin, valued at approximately $500,000, which was stored in a concealed wallet.
Reflecting on this revelation, she remarked,
“It was never even a thought in my mind because it’s not like we were discussing it or making investments together. It was definitely a shock.”
As more couples navigate the complexities of divorce involving digital assets, understanding the legal landscape in South Korea becomes imperative.
Engaging with legal professionals who are well-versed in the nuances of cryptocurrency asset division can significantly impact the outcome of such cases.
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