If Kanye West and Kardashian divorce, how will their Bitcoin be divided?

By Jeff Benson
Translation: Lu Jiangfei

According to celebrity publication Page Six, American socialite Kim Kardashian West and rapper Kanye West have reached the "seven-year itch" after six years of marriage, and the two are now likely on the verge of divorce.

This news is enough to shock the American and even global entertainment circles. People seem to be very interested in this upcoming "battle to defend marriage". However, for people in the cryptocurrency industry, their focus seems to be somewhat different from that of the entertainment industry, because Kim Kardashian owns Bitcoin!

In July 2018, Matthew Roszak, chairman and co-founder of blockchain technology company Bloq and founding partner of Tally Capital, publicly gave Kim Kardashian 1 Bitcoin, which was worth about $8,000 at the time. At that time, Matthew Roszak admitted that the gift of Bitcoin was more symbolic because $8,000 was insignificant compared to Kim Kardashian's income.

On July 30, 2018, Matthews Roszak tweeted: “The first @cityofhope charity poker tournament was so much fun, I gave Kim Kardashian 1 Bitcoin, her first Bitcoin.”

When talking about Kim Kardashian's divorce, Matthews Roszak said: "Although I know that Kim Kardashian and Kanye have huge assets, I can be sure that their assets have definitely not doubled in the past two and a half years, and now the price of Bitcoin has exceeded $33,000!" (Chain News Note: According to Coingecko data at the time of writing this article, the price of Bitcoin was $34,780.64.)

Regardless of Bitcoin’s value, Kim Kardashian is sure to bring up the asset during divorce proceedings.

“In California, unless Kim and Kanye West had a prenuptial agreement, this would be considered community property,” explained California attorney Norman Fernandez. (Kim and West did have a prenuptial agreement, but it’s unclear whether their prenuptial statement mentioned or involved Bitcoin.)

Community property refers to income or property acquired after a marriage, at which point the spouses own it equally. Therefore, community property can be divided as part of a divorce.

Bari Weinberger, a partner at Weinberger Divorce & Family Law Group, a law firm specializing in divorce cases, explained in 2019 how to divide cryptocurrency assets when a couple divorces. He said there are two ways to divide cryptocurrency assets when divorcing:

• The first strategy is to choose to sell Bitcoin directly and split the proceeds in USD. However, given the length of the divorce process and the high volatility of Bitcoin (for example, Bitcoin was worth less than $20,000 last month, but now it has fallen below $35,000), selling Bitcoin directly may not be the best strategy. Of course, Bitcoin may also end up being shorted. In addition, selling Bitcoin will also have tax issues.

• The second strategy is to create a separate digital wallet for the other spouse and then transfer the equally divided Bitcoins to the other spouse's digital wallet. This is because digital assets are different from other assets (such as paintings or houses). In contrast, Bitcoin can be easily divided without selling.

Of course, this may just be our wishful thinking for Kim Kardashian and Kanye West, and it also assumes that Kim Kardashian has not forgotten the key to the Bitcoin... When asked if Kim Kardashian still controls the gifted Bitcoin, Matthews Roszak replied: "I don't know, and it seems a bit inappropriate for me to say anything at this time."

It is worth mentioning that Matthews Roszak also gave Bitcoin to Virgin Airlines founder Richard Branson and former US President Bill Clinton.

There is another very "interesting" situation. What if Kim Kardashian gets Bitcoin and finds Bitcoin "really good", and then buys more Bitcoin without Kanye knowing? In fact, Kanye's lawyer can ask Kim Kardashian to provide bank and credit card statements to determine whether she purchased digital assets on cryptocurrency exchanges such as Coinbase, and the lawyer can also ask Kim Kardashian to provide a key to confirm the purchase transaction.

In a 2020 article for the Journal of the American Academy of Matrimonial Lawyers, attorneys Richard West and Jonathan Fields wrote about divorce proceedings involving crypto assets: “If a court has personal jurisdiction over the other spouse, that spouse can be ordered to provide a private address, just as a court can order them to provide an account login and password.”

In fact, this is no longer just an academic issue. In February 2018, it was reported that a series of marriage disputes occurred in the UK, and many divorcing couples were worried that their partners used cryptocurrencies to hide private assets. From this perspective, Kim Kardashian may also want to know whether Kanye has "secretly" purchased cryptocurrencies-the rapper reportedly praised Bitcoin creator Satoshi Nakamoto when he participated in Joe Rogan's podcast in October 2020. He said that Satoshi Nakamoto was a visionary and truly liberated the United States and even all mankind.

The question now is: Did Kanye West buy Bitcoin? Did he invest all his money in a half-assed US presidential campaign?

Another question is that the price of Bitcoin is currently rising, but if the price of Bitcoin falls, how should the divorcing couple deal with the "asset loss" problem?

In law, there is a word used to describe the waste or loss of marital property: dissipation. Sometimes there are many ways to "dissipate", such as Kanye West's campaign for the US presidency, which requires money, and he will "dissipate" family assets in political campaigns. As Richard West and Jonathan Fields pointed out - in theory, buying Bitcoin is also a kind of "dissipation" of family property, a bit like gambling, because the Bitcoin market is particularly volatile, and some courts may regard losses as "dissipation" of marital property.

Considering the skyrocketing price of Bitcoin today, Kanye West and Kim Kardashian shouldn't have this problem.

The cryptocurrency industry occasionally gets a little gossipy, so stay tuned to the Kardashians to see how this Bitcoin-related divorce drama plays out.