Husband is rightful owner of cryptocurrencies, Indiana Supreme Court rules

IL file photo

The Indiana Supreme Court reversed a trial court’s denial of a husband’s motion for partial summary judgment over the issue of ownership of cryptocurrencies that were not initially accounted for during his divorce proceedings.

According to court records, Christi Wohlt and August Wohlt owned a company called Echo Systems Inc., which mined, traded, and stored cryptocurrencies. When they dissolved their marriage, they agreed in their property settlement that “Husband shall retain all assets of the business, except for,” Christi’s technology.

However, they both forgot that Echo Systems still owned some cryptocurrencies.

At the time of the divorcing couple’s mediation, the Bitcoin and ETC units had a combined value of approximately $18,000.

In June 2016, Delaware Circuit Court Judge Marianne Vorhees issued a decree of dissolution, approving the parties’ property settlement agreement and finding that “it was entered into fairly, without fraud, duress or undue influence and was fair and equitable.”

After the divorce, in July 2016, ETC was “forked” into two cryptocurrencies, ETC and Ethereum. August came into possession of 1,000 units of ETC.

August Wohlt later searched the Echo computer hardware and software and discovered records pertaining to the ownership of the cryptocurrencies, which confirmed he was still in possession of the ETC units.

He alerted his counsel to the cryptocurrencies.

His counsel reached out to Christi Wohlt’s counsel and provided notice that the husband had become aware of the existence of the Bitcoin and ETH cryptocurrencies.

In May 2020, Christi filed her “Verified Motion to Address Asset Omitted from the Marital Estate and Child Support Matters.” She alleged that August had “failed to disclose” the Bitcoin and the ETC.

In January 2021, August filed for partial summary judgment and designation of evidence on the issues of Christi’s request to divide the cryptocurrencies, which included the ETH units acquired by August as a result of the “forking” of the cryptocurrencies which occurred after the execution of the proposed settlement agreement, and her request to modify child support from 2017 forward.

The trial court denied August’s motions.

In April 2022, the trial court entered its order equally dividing the value of the cryptocurrencies, resulting in an award to Christi of $1,842 for the Bitcoin, $14,000 for the ETC, and $208,441.63 for the ETH, for a total of $224,283.63.

The Indiana Court of Appeals ruled in October 2023 that August was entitled to summary judgment on the cryptocurrencies.

The high court agreed and reversed the denial of August’s motion for partial summary judgment.

Justice Derek Molter wrote the majority opinion for the court, which “hold there is no ambiguity, and the parties’ agreement that August would retain ‘all’ of the company’s assets included the company’s cryptocurrencies.”

The high court further found that the trial court did not have the authority to modify the parties’ agreement.

“In sum, we decline to affirm the judgment based on a trial court’s authority to modify a property settlement procured through fraud because the trial court didn’t purport to exercise that authority, Christi didn’t request that the judgment be affirmed on that basis, and the record doesn’t support affirming on that basis,” Molter wrote for the court.

While Chief Justice Loretta Rush and Justices Mark Mass and Geoffrey Slaughter concurred with the opinion, Justice Christopher Goff dissented with a separate opinion.

He wrote that the property-settlement agreement was ambiguous and that the high court must defer to the trial court’s construction of the agreement. He further wrote that he would hold the trial court reasonably divided the post-dissolution value of the coins.

“To award Husband the entire value of the omitted cryptocurrencies would lead to inequitable results and provide him with a financial windfall,” Goff wrote.

He also wrote that Christi could prevail on her constructive-fraud claim.

The case is August Wohlt v. Christi Wohlt, 24S-DR-385. Appellant’s attorney: Ralph Dowling with Dowling Law Office. Appellee’s attorney: Amy Carson with Massillamany Jeter & Carson LLP.