South Korean court can trace "cryptocurrency" assets in divorce cases, no escaping alimony payments

As cryptocurrency ownership becomes more common, these digital assets are gradually entering legal disputes, including divorce proceedings. A recent case in South Korea, as revealed by a law firm, sheds light on how Korea handles the distribution of crypto assets in divorce cases. South Korean law firm IPG Legal recently stated: "Under Article 839-2 of the Civil Code of the Republic of Korea, Korean divorce law allows spouses to request the distribution of any property accumulated during the marriage, including tangible and intangible assets."

The Rise of Cryptocurrencies: Joining the Battle for Assets

In a recent ruling by the Supreme Court of South Korea, the legal status of cryptocurrencies has been explicitly confirmed as distributable intangible assets. This ruling signifies that any Bitcoin or other virtual currencies accumulated by a spouse during marriage, regardless of their anonymity or decentralized nature, are considered distributable marital property.

How to Find Hidden Crypto Assets?

In South Korea, if a spouse knows which cryptocurrency exchange the other party uses, the court can order access to transaction records to verify the amount of assets. If the exchange is unknown, evidence can be obtained through analyzing bank withdrawal records and other means to trace transactions, and further request forensic investigation.

How are Crypto Assets Distributed? Liquidation or Direct Allocation

The volatility of the cryptocurrency market makes the division process particularly challenging. South Korean courts typically offer two main options:

1. Settlement of cryptocurrencies at the current market value, then distributing the proceeds in cash between spouses
2. Direct allocation of the cryptocurrencies themselves, allowing both parties to hold tokens in proportion

However, due to the extreme price fluctuations in the cryptocurrency market, this often requires both parties to discuss more innovative solutions in litigation. Therefore, determining an effective distribution of such assets still requires significant time for legal professionals and financial advisors to explore.

The UK Parliament has also introduced a new bill, primarily aimed at protecting and establishing the status of digital assets. They formally include digital assets in the scope of personal property, allowing digital assets to be legally protected, similar to houses and cars you own. Consequently, in divorce cases, courts will have a clearer basis for handling the distribution of digital assets.