Discovery & Division of Cryptocurrency Assets in Korean Divorce Cases

As cryptocurrency investment becomes increasingly popular in South Korea and throughout much of the world, it has also raised complex issues in divorce cases and other asset division cases. Due to its decentralized and often anonymous nature, digital assets like Bitcoin are sometimes used to conceal wealth during divorce proceedings, estate matters, and other asset division matters. Below, we answer common questions from IPG Legal clients who are navigating divorce cases and we shall have articles posted, in the near future, on other asset discovery issues facing clients. Check back regularly and you can subscribe to this blog via the sidebar to the right.

Division of Cryptocurrency in
Korean Divorces

Is Cryptocurrency Included in the Marital Asset During a Korean Divorce?

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. This provision encompasses any “property” acquired during the marriage, including both tangible and intangible assets.

A recent Korean Supreme Court decision has confirmed that cryptocurrency/virtual assets, including Bitcoin, constitutes “property” due to the recognized economic value as an intangible asset (Supreme Court Decision, May 30, 2018, Case No. 2018Do3619). In short, this means that any cryptocurrency held by a spouse during the marriage is considered part of the Korean marital estate if acquired during marriage.

How Can Cryptocurrency be Discovered in Korean Divorce Cases?

If a party is aware of the cryptocurrency exchange utilized, the Korean court may issue a fact-finding investigation or an order to obtain financial transaction records to verify the amount of cryptocurrency held. In cases where a party is unaware of which exchange is being utilized, analyzing a spouse’s bank withdrawal records and other creative means of forensic investigations can trace transactions related to cryptocurrency exchanges. By identifying specific transactions, Korean courts can request further forensic investigations.

What Are the Methods to Divide Cryptocurrency in Korean Divorce Cases?

When it comes to the actual division of cryptocurrency during a Korean divorce, there are two primary methods of dividing assets by Korean courts (however in a settlement parties are open to more creative manners of dividing and/or offsetting assets, including, payments over time.)

1. Cashing Out: You can choose to liquidate the cryptocurrency at the current market value at the time of divorce and divide the proceeds between the parties.
2. Division of Cryptocurrency: Alternatively, you may opt to divide the cryptocurrency itself  and retain cryptocurrency holdings based on its current valuation.

The choice between these methods should consider the volatility of cryptocurrency markets and the long-term price outlook of the asset in question. In many cases, negotiations lead to a creative means to resolve asset division issues.

Conclusion

Cryptocurrencies/virtual assets like Bitcoin are now a recognized form of marital property subject to division in Korean divorce proceedings. If you are involved in a divorce proceeding involving cryptocurrency assets, it is crucial to work with a legal team in Korea experienced in assisting clients in complex divorce matters involving worldwide and cryptocurrency asset division.

IPG Legal has successfully handled high-asset Korean divorce cases, including the division of digital assets. Contact our team to schedule a consultation with an experienced Korean attorney.

by Mina KIM
Mina is a Korean attorney working in the Seoul Office of IPG Legal. To learn more about IPG Legal please see: IPG Legal’s Family & Divorce Law Practice Group. Schedule a call with an attorney at: Schedule a Call.