Hi, welcome to valuation podcast.com, a podcast and video series about all things related to business and valuation. My name is Melissa Gragg and I provide online divorce, mediation and valuation services in St. Louis Missouri. Today, we will discuss cryptocurrency and divorce with Carolina Martinez, a certified fraud examiner certified cryptocurrency investigator, and a cryptocurrency accountant in Miami, Florida. She has over 16 years of experience in the accounting field and has worked in different industries, such as hospitality, education, telecommunications, public accounting, aviation, real estate, and cryptocurrency. She's an advocate for human rights and is very passionate about defending and protecting the most vulnerable welcome Carolina. How are you?
Carolina Martinez:I'm giving you. Thank you. Thank you for having me.
Melissa Gragg:Oh, this is so exciting. You know, cryptocurrency really isn't well known or I think we know some of the key words or buzz words, but I think it's going to be excellent for you to help us understand this a little bit more from an accounting perspective, from a divorce perspective, but we're going to start at the basics because some of us, we will remain a name really need to start with just understanding, like, what is cryptocurrency just in general?
Carolina Martinez:Okay. Cryptocurrency in simple terms, it's like virtual money is you don't money. Um, basically it's difference who was created to half a decentralized, um, banking system. So right now, if you have your dollars and you want to keep it safe, you go to the bank and you deposit into the bank, creates a currency, um, is digital and is, um, it is based on a blockchain technology. What I mean by blockchain technology is that is, um, it is in a decentralized system and blushing, the knowledge cannot be tampered. It cannot be changed once a transaction happens in the, in the blockchain, it can a, there's nothing that you can do to change it. So that that's basically what cryptocurrency is. You can use it to buy things or services right now. And if you go to the movie theater, I'm not gonna mention names, cause we're not doing a promotion here, but if you go to a particular movie theater, you can go in pain. If you have your cryptocurrency wallet on your phone, you can go and be, uh, for the movie tickets and as well for services. For example, I in my friend would say, uh, crypto currency payments. So you can be for services for that. You can also use it for investments. Let's say, uh, if you want to buy Bitcoin, um, even though cryptocurrency prices fluctuate a lot, a lot of people they can buy Bitcoin, let's say they bought it when Bitcoin was$10,000. Uh, right now they will have a gain of about$50,000 because the price is over$60,000. So it can be used for many different things. Uh, the main reason people use it right now is to do investment and to unfortunately, a lot of people that do not know how free to work, they use it to cash out, uh, quite good money. So that's another subject.
Melissa Gragg:Well, and that's what, you know, I think that most of us who didn't know anything about cryptocurrency saw it recently with a dozer coin, right. And everybody got excited about it. And you know, there was a whole population that thought that they kind of come in and, and, and shifted the market, but did, is dojo coin and, uh, Bitcoin just types of cryptocurrency or how does that work?
Carolina Martinez:Correct. There are many types of cryptocurrencies. Uh, there is big point, which is the first one. That's the first one that was created and, um, dosh coin. It was basically what they call a mean coin, which is so one just created just to, to have fun. And just to prove that, uh, crypto currency was just a joke, but then it grew, then we had Elon Musk talking about it and we'd have more Q and a talking about it. And then everybody and their mother wanted to, so getting to tricks. So I have high probably that, uh, he told me that his grandfather was talking about crypto. So he said, this is where things are getting interesting now, because even our grandparents are talking about crypto. So yeah. And there is another type of presupposes that there is many, but, um, there is one that is called stable coins. The stable coin is actually backed by a actual international currency, like the us dollar or the Euro. So there is many different ones. I cannot tell you which ones to buy or invest because I'm not an investment advisor, but, um, there's so many going. So right now, out there that, um, it can get a little bit, um, complicated for people that don't understand crypto. And even the people that do understand that I myself have to be doing research every day because it changes by the minute.
Melissa Gragg:Okay. Cause that's, that's what I was wondering too, because it seems like it is very complex and complicated, even if we just step one, step one, step back, because then we'll talk about kind of the tax effects of investing in. But if we just have you, you said something and there's a piece of this that I don't always understand is the blockchain technology. And I feel like the blockchain technology, uh, I don't so get, it seems like it does protect the currency, but it also like keeps people out in some capacity. So can you elaborate on that?
Carolina Martinez:The blushing, there is many different blockchains where the crypto currencies are created, but the main purpose of the blockchain is to be a public ledger. So everything that happens in the flushing just stays there. Uh, all of the information of the transaction is there. The only information that is not available in the blockchain is it's people's names. So if you send me, let's say, um, you send me one Bitcoin, uh, and I receive it in my wallet. You can see that it came out of your wallet and he came in in my wallet, but you cannot say your name or my name in that transaction. So the purpose of the blockchain is that everything is falling, but also keeping the privacy of the people doing the transactions. Um, there are tools out there that can trace those transactions. So the people, but those are, uh, complicated, uh, tasks that especially have to do not. Let's say if you are a regular person that just wants to know if someone has three, then you go into the blockchain to see it. You will not figure out if that person has creaked or not. Sure.
Melissa Gragg:Well, and is that, is that how people have like lost their codes or their, you know,
Carolina Martinez:So the way that people can protect their curricula is to have private keys. You can have your wallet addresses public, but you have a private key and you cannot do anything if you don't have that private key, if you have, suppose let's say I have seen clients and it happened to me and my husband when we first started back in night, my husband said in 2013, I started in 2017 on our personal level. If let's say you have a conversation with someone in telegram or some YouTube, where, which I have, I find that happened to him. He was watching a YouTube video and the YouTube had a, in the discretion said, just reach out to me on my WhatsApp so I can help you invest in crypto. So my clients spoke to that person and that person told him, oh, send me one Bitcoin centrally back then that Bitcoin wasn't$60,000 worth. So fortunately he gave person his private key. When you want someone to send you coins, or you want the thing points to somewhere, you just need to give them the wallet address, do not ever give them your private key. Yes. Because basically that to put super in simple terms, if you want to get into your house, you are the only one that you have your key and open the door. If you give the key to somebody else that other person is going to be able to enter your house.
Melissa Gragg:So it's, that makes sense. And if you use the same analogy with the house, it's like, people might know your address, but they can't get, they don't have a key to get in. So they still can't access the contents. Okay. That was really helpful.
Carolina Martinez:Oh yeah. And to explain it at, based on the flushes, let's say you have two house and if you go to the CDs records, you put your address there, you can see yourself, your house sells history. You can see when it was sold. Sometimes they have the name like here in Florida will have the name of the people that bought and sold the property. Uh, but in the blockchain, she would not have a name. It would just show you, address your home address, but it doesn't give any more details for you to get into that house.
Melissa Gragg:But what it show the actual amounts that have been transferred and maybe like to another address as well.
Carolina Martinez:Okay.
Melissa Gragg:That makes sense.
Carolina Martinez:Like I said, I always tell to my clients, like what happens in Vegas? I would say what happens is what happens in the blockchain is things in the blockchain.
Melissa Gragg:Gotcha. Oh, there is a way to trace it. It just also is kind of, um, you know, not very clear on who owns it. So if you lose your key and nobody else has the key, is that how some people have kind of like lost their,
Carolina Martinez:I'll give you my personal example. Um, back in 2017, our computer guy hat we had, I don't remember how many Syrian there, but we do have a private key. And the way that we set it up was for a somebody else who wants to use it, they need ethics and key. They need to create another key, but they also need our key. A lot of people don't do that. A lot of people, they just have one key and they don't do security diminishers. So our computer guy had one of our wireless guest hat right now that while it is worth almost$2,000, because it was easy Syrian, which is one type of point because crystal Graham could get the currency coins that we bought back in 2015. And we know that that other person tries to get it, but things, our security measures where that other person created another key, but he or she needs our key who have access to it. What happens with a lot of people is that they do not with security, security measures into their wallets or their exchanges. So if you don't have that type of measure and you computer gets hacked and you have your private key to safe in your computer like that, you have a word document, or you have it in an email, and that hacker's able to find this private key. They can get into your wider than just still everything that you have for us. We have the private key printed in a piece of paper. So it was not in our computer. And that's why the other person is not able right now that those going inside there and nobody can take it. And, uh, we're trying to get it, but it's, it's a very hard process. So whenever you do anything in crystal currency, you have to make sure that, you know, what, why are you doing it less? If you're sending points, where are you sending points? Because once you send it, you might not be able to get it back ever.
Melissa Gragg:Well, and if we go back to the dojo coin, then if you're buying Doza coin, you're really just investing in a company that's based on cryptocurrency, right? You're not, you're not really buying cryptocurrency when you're investing in dojo coin.
Carolina Martinez:Um, don't dosh coin is different Dutch point. The person that created it, um, he really wanted to prove that, uh, cryptocurrencies decentralized. So when he created it, he basically sold all his coins. So nobody owns those coins. There is not an owner there. So people buy it, uh, uh, going back to the blockchain, they buy it out of, out of the dosh coins, the machines, which I don't remember which blockchain is that they use because there's different ties. Um, but rhino, there's not an owner. And that's why a lot of people like mark Cuban and, uh, Elon Musk, they are falsely proud those coin because it's proving that you don't need a bank behind it. You don't need so one behind it to be able to, to trade those types of coins and to buy it and sell it or buy anything right now, move their movie theaters, affecting dosh coins for foreign payments.
Melissa Gragg:Well, and there's certain apps that even, you know, we don't have to mention them, but there's certain apps that it says I can invest in Bitcoin. Right. And I can purchase it currently. So that's probably like the least secure way to
Carolina Martinez:Depends. You have to make sure you know what you're getting into. If you go into a NUS, um, it's changed, um, let's say Coinbase or bindings, they do offer Coinbase. Even if you want to learn how cryptocurrency works, they give you rewards. They give you points for free. Of course they will not give you$10,000 worth of Bitcoin. They tell you, I'm going to give you$10 worth of Bitcoin for you to learn how we work, because they want people to learn how we were so they can get more people buying their points, buying their points in their platforms, because they're not the owner of the coins. They have. They basically like the, the, uh, stock exchange markets. They, they have, their companies will be traded there. So if the points are traded in their platform, so you have to be careful where you put your money into it. I always tell people I'm not a financial advisor,
Melissa Gragg:But, um, it's just go with the way you don't know how it works. Go with the big companies are US-based for the us clients and make sure you do your due diligence. And if, if companies like Coinbase is offering you to get$10 for learning, I wouldn't mind taking that. Just they have small courses where you learn, they even give you a little quiz at the end. Um, so yeah, those are good. But then if you get one company that just came out of nowhere saying if you invest in my brand new Rachel, that I just created, if you put a thousand dollars, I will give you a$10,000 in three months. That's a red flag. Do not invest in that. So you have to make sure you do your two delegates before, and it depends on the company, how long they're been in business and what is the duty or their purpose behind it? No, I think there's even more complexities than I originally thought.
Carolina Martinez:Yeah. It's a little bit complicated with that. My main goal, my main goal is to educate people as much as possible.
Melissa Gragg:Yeah, no, you're, you are breaking it down very simply. So let's say I get comfortable. So I figure out a little bit about cryptocurrency. I figure out that I can invest in it and I buy some, um, cryptocurrency. Right. So now I've invested in it, but I don't really understand the tax life. Like, is there any tax liability even in that situation or can I just trade things back and forth?
Carolina Martinez:Yes. That's this big misconception. A lot of people since cryptocurrency was created, uh, to be decentralized, to not be backed by anyone or any bank officially banks or, or the government. Um, it also offered the sense of security and privacy. So a lot of people believe, still believe that you don't have to report your cryptocurrency transactions, but I hate to break it through a lot of people, mostly everything is that you're doing Chrysalis possible. Uh, 90% of the transactions that you're doing, correct. So create a taxable event. So let's say you are taking those courses that I mentioned to you previously in Coinbase or any other platform and your, you get$10 worth of Bitcoins that will be considered income. According to the IRS, it will be an income to you because I'm using the, do anything you did not purchase that. Uh, it is a taxable event that you have to pay taxes for ordinary income for things like that. And then if you do a lot of courses, just to put it in simple terms,$10 here,$10 there, it can reach after the$600 and or more. I have people that they get into other types of, uh, uh, transactions. Um, some of them is called mining or staking. Um, I don't know that I'm willing to lead some because that's out big, more complicated. So basically the purpose of mining and staking is for you to receive, uh, coins into your wallet. And that is an income event. Um, on the other side will strong fashion that could increase your tax liability is let's say you bought a Bitcoin last year, and then you sell it this year that will create a capital gain. Either you had to pay it long-term for long-term capital gains or short-term capital capital gain. And that depends on how long you hold the coins for. If you hold the coin for more than a year, then you will have to pay long-term capital gains, which will give you a lower tax liability because the rate on that will be less. If you have the coin for less than a year, then it might increase your SSI ability because then it will be based on your regular, uh, taxable bracket. So then it gets more complicated because then you will have to, you do, you will have to do your cryptocurrency tax reconciliation, which will help a lot of clients to do. And then you will have to add that to your SAS returns. And based on your overall financial situation is your, how the bracket was changed from how much you would have to pay in cryptocurrency, uh, capital gains loss or older income. And,
Melissa Gragg:Um, am I, but I think one of my questions is having to do with the taxes is, are wherever I'm investing in the cryptocurrency, are they reporting that these transactions are happening? Or am I responsible for self-reporting or providing that information to my accountant
Carolina Martinez:Right now? There's not a lot of guidance for the, from the IRS, but you are responsible to self-report. Uh, they are so much changes that are now reporting their transactions to the IRS. A lot of them wouldn't know which ones are those, but, um, you can get the ones that are already publicly traded like Coinbase. Um, some that are already in, in a core process or in a case investigation from the IRS. So I always tell my clients do not wait for the IRS to come after you just sales report. It is better for you to pay what you have to say than just go and pay penalties and even half a more complicated case. If the amount of money that you hiding from the IRS is, is, uh, they come out, you know, that could go even into criminal charges, depending on what type of strand fashions and, uh, you're insane for hiding it. So I always told my clients self-reported you are obligated to self-report it do the right thing, do no way for them to come after you.
Melissa Gragg:And there's no difference currently in the tax rate regarding crypto versus other capital gains. Um, do you hear anything or I think, right. Do you hear that anything might change?
Carolina Martinez:Yes, they are. Right now, there is not, like I said, there is not a lot of guidance, what they are working right now. There's a bill in Congress that are not going to go into detail right now because it's more complex. But yeah, the way that we report that we could save money in taxes with the capital gain right now in cradle might change early next year based on what the Congress is discussing now. So basically what they're trying to do is basically see cryptocurrency more like stock, where you can not do what we can do. Now we can do the lock harvest enroll in cryptocurrency, which means that you can sell a coin at a loss today and buy it right away. So you can save money in passes with stocks. You cannot do that. You will have to wait 30 days to, uh, buy that stock again. So if they they're saying they're discussing it in Congress, if they change the rules beginning of next year, then crystal is going to get a bit more complicated. But, um, let's see, they just talking about it. Probably they will get, they will get approved, probably April get approved, but since there is not a lot of guidance out there, um, we try to help our clients as much as possible. And we are very conservative in the way that we'd do our reporting because the more conservative you are, I think the better you are going to come up, if you have any issues with the IRS.
Melissa Gragg:Yeah. And I, and I think everybody's, you know, even legislature is trying to figure out how to work with this. And they don't always think about the accounting effects of some of the things that they do.
Carolina Martinez:And the things that a lot of them don't understand this, a lot of government agencies do not understand how cryptocurrency works. So that's why it's very complicated for them, um, to actually come up with something every time that I get a client complain about it, I'm like, okay, but they, you know how it works. Do you actually know how it works? Because a lot of people, they don't know how we work. So they, they are relying on people that either have little knowledge or they just trying to figure it out. So I do think that they're, they're gonna make a lot of changes. I don't think it's gonna happen soon within next year, but it will happen sometime
Melissa Gragg:Well. And I think you present it at least one way that you can prevent crypto-currency fraud with the double key or, you know, so, but are there other ways, and I probably didn't even totally understand the double key, but, but basically one was that you have your key and then if anybody accessed your information or, you know, got into your computer, that they would have to have your key and they would have to create another key, but are there other ways? Yes.
Carolina Martinez:Yeah. If they create another key, they will need your key to anyways, but there are many ways the first thing, the most basic one is before you get into any, anything in crystal or any, any other thing in, in, in regards to investment or putting your money in other places is do your due diligence. Make sure you understand why you're putting your money into it, uh, understand how we've worked and made sure you know, that the company that you're putting the money into it is someone or something that is legit. And, but the main thing is make sure you understand that once you get into it, um, even though you don't understand a lot, how we've worked, made sure that you process, uh, all of your coins wireless or changes. So there's different types of wallets. There's a while is that you can have on your mobile phone, made sure that you have a password protected wallet made sure that you can have to a second, um, verification process, meaning that you can get a test message on your phone. Every time that you get into your, into your wallet, you can put first classroom, then the code that you get on your test message, um, made sure that nobody else has access to it. Make sure that if you have it in your computer, make sure that you have a very good, uh, software that can protect you from getting hat. You can still get half of that's the biggest, the biggest concern with cryptocurrency that, um, it is digital. So anything digital can get hacked. The blush change cannot get hat where your wallet can get hacked. So you have to make sure that you take those steps to protect yourself, make sure that you have double verification processes. Nobody has access to your, to your why that's exchanges or anything. And if you, um, have an exchange, let's say Coinbase Binance, that the email that you use is the one that is only used. That is, that is going to use it and also do the secondary education, which is a, you can get a text message on your phone, or you can download an authenticator app. We're able to create a code that nobody else can see within seconds. And then it will generate one, one more, one more code in a few seconds. So those are the types of things that you can, uh, do to protect from getting, um, hats or from getting scammed, getting from getting scammed. You had to make sure that you know, where you put in your money.
Melissa Gragg:And I think a lot of people that could be investing in this might not even know how to use computers very well. And so, you know, this is very complex security measures that are all electronic, all, you know, based on that. So if we shift just a little bit and we say, okay, so we understand crypto now, and now let's switch to, you know, I'm getting divorced or something is happening. How do I know? And is there any way for me to know that my spouse has like secretly invested assets in cryptocurrency?
Carolina Martinez:Yes. Already told you like when my husband first getting into it, I I'll be honest. I didn't understand the mush back in 2013, I used to tell him you're crazy where you putting our money on how is this virtual currency works? So what w what I did on a personal level, when we first, uh, when he first started getting into it, I call him, I need you to tell me where you putting the money, because if something happens to you, nobody else can ask us that. So if your spouse already gave you the information for you to access this in case of something happens, because we don't know, we don't know what's gonna happen tomorrow. Um, it's easier now. I have seen it from clients. And since the first session of Chrysalis to being used to be private, a lot of people do not tell anyone if they have cryptocurrency. One of the key things that you can do during a divorce or separation is if you have a joint account, or if you have assets to the bank account, does that other person look at the transaction? If you see that your spouse sends a thousand dollars to Coinbase, that would tell you that that person has a crystal currency or at some point had it. So it will give you a clue that something is there for you to investigate. That's the easiest part. Now, if it gets to a nasty, complicated divorce, then you might need to get the court in more involved. And then we'll have, you will have to request access to the person's, um, bank statements to the person's computer. Uh, if you already saw your spouse downloading apps in the, in their cell phone, that will show you that you, that they might have cryptocurrency. And again, that goes back to getting into stages, because now you have to do a research, or you can hire someone to tell you, okay, there are so many apps with Brits occurrences. You need to know the name of all the apps, to be able to know that that person has, um, cryptocurrency. Now, when it gets more complicated, let's say that third person doesn't want to tell you those, or want to sell the cord with a core set. Okay, you need to give us information. Then you would need a crystal for investigators to investigate if that person has cryptocurrency. And usually what we look for, we look for, uh, um, bank statements to see if the, there is a transaction to any, to going to any cryptocurrency exchange or platform. Um, we also look to see if the person has, which you might need. Again, this might be invasion invasion of privacy. So you will need the course to approve it, to get access to the email, to the person's email, to see what type of, uh, cryptocurrency they have gotten into it. Because I do not recommend anyone to do an investigation behind someone else's because then you might be breaking some laws. And then at the worst case, it would need to get the court involved. And, um, the apps on the cell phones on the computer, all of that, you need to make sure that if you find anything that is a cryptocurrency also there's wallet, paper, wallet. If you find a paper with a QR code, check it out, you might be a, uh, a while is a cryptocurrency wallet. Usually has a lot of numbers and letters at the bottom. And then you can go to the blushing change into that address in there. And then you can see all the transactions there. So the main point is to get to that blockchain ledger information. So, but before you get that, you have to make sure you find information. Sometimes what I have seen, um, is not that common yet because I criticized something that is booming now, and now people are understanding, and a lot of people are getting to know what it is, but what the court I was reading about us, occasionally the court made the ex husband provide all the wallet addresses, so he needed to provide it. He said he didn't have marsh that he had$2,000 in cryptocurrency. When the crystal investigator looks at all the one that addresses, he has$250,000 in cryptocurrencies that the wife didn't know about. So, yeah, that's the, one of the bits that you, it is complicated. Uh, it saves a lot of resources as a regular person, like lifting golfer bed. Uh, I'm getting divorced tomorrow. Um, my case is different because I have access to everything, but it's somebody else that is getting divorced tomorrow and they don't know anything about it. It gets complicated. And then you will have to either hire someone or just do a lot of research.
Melissa Gragg:Well, and I think that, you know, this is, this is kind of a duplicate question, if you will, you know, so if they're there in the process and trying to prove the other spouse is actually hiding it, what I'm hearing you say a lot is that a lot of times they're printing it on a piece of paper. Maybe that piece of paper is going into a safe or a security box or a lock. So I'm thinking, you know, even if you could identify that there was a receipt for a security box, or, you know, in your house, if there was a safe, there might be documents in that capacity. Um, do you also see, I mean, you just talked about the case where they had to give all the wallet information. Doesn't that also create a little bit of a complication that there you're, you know, you have to provide this information and now, you know, is it less secure in some capacity? You know what I'm saying?
Carolina Martinez:No, because the information that, that they have to provide is just the address. It is found in the, in the blockchain and it's public information. They do not have to provide their private key or less. Um, when, when the government, the cases that I have seen that the government has, uh, request of people to provide their, uh, private key when it is a fraud case. But let's say the divorce in this case, uh, uh, the divorce case, uh, Josh says to the person that has the assets that, okay, we're going to split it 50 50, then that person willingly will have to send that 50% to the other person while it, but he does not have, or he should do not have to provide the private key. Uh, if it gets more complicated, you know, that could be Borst cases can get complicated, then they will have to hire a third party, um, to add like, um, mediator. And then that's, our body will have to give the, either the points into our wallet or the private key to make sure that they get limited.
Melissa Gragg:Right. Cause they would have to verify the amount and you know, and things like that.
Carolina Martinez:Yeah, I'm on, you cannot verify it by looking at the blushing. You can verify the MOS. Yes. Because, um, you say this, um, the blockchain ledger is like, um, if it's like a bank statement to put it that way for all the transactions that happen in the blockchain, but it's a public information ledger. So if you go in there, you will see a bunch of transactions. It will not tell you who it is, but if you already have the wallet address and that person says, yes, this is mine. Then you are able to tell, or Josh, in this case, we will be able to say, okay, you have this much because we see in the, in the blockchain, um, that you have$250,000, we needed split it half and half just with even a sample.
Melissa Gragg:Yeah. That, and that's a good example because how it would be split, you know, in, if you had a normal investment account, we would quote you, we would do this Quadro, which is like, you tell the bank to split the account. But in this situation with cryptocurrency, it would be like, the blockchain will say you have the 250,000, and then the person that owns those accounts would transfer the 1 25 or half of it to another person's basically cryptocurrency wallet that they would have to create. Right.
Carolina Martinez:Okay.
Melissa Gragg:And then, and so I think that gets us a little bit to our next question, which is how are the crypto transactions tracked in this ledger? But also, you know, when I let's say I'm, I'm the spouse and I get that 125,000 transferred to me, like, I don't know anything about it. Can I just go and take, can I get cat? Can, can you give me some cash?
Carolina Martinez:Yes, yes. Um, um, if you don't know anything about it, I suggest that you hire yourself one that can help you, but, um, if you move it to any, uh, it's changed like, um, let's say the biggest one, uh, Coinbase, vinyls, and cracking any other that, um, that you can use, you can move in there or you can receive it there, and then you can just sell your, your coins in that platform and then get your us dollars deposited into your bank account.
Melissa Gragg:In some cases I could actually use the currency to buy other things,
Carolina Martinez:Correct? Yes. Um, and you can also in divorce cases, they can dispose and decide if let's say you said, I don't understand anything about crystal. The spouse can say, I want the money in, in cash. So that other person gives you a down gun and give you$125,000. And I'll keep all my coins. And I don't have to give you anything older than just cash. Yeah. That that's one type and how cryptocurrency transactions are tracked. Again, you can go to the blockchain, there are many different types of flashings. Um, you can go to blushing that, that come and there. And look there, they have some, uh, uh, change theory and Bitcoin that you can go and see the transactions. Um, there's so many other, um, websites that you can go like ether scan, which is very[inaudible] type of, um, uh, crypto where you can go and see all the transactions that happen in this machine. Um, there's also for more complicated cases, like the divorce case that we discussed, there's also cryptocurrency investigation software that basically those software glad they do. You put the one address in there and then it will show you all the transactions and where you went to. And then if he went to a, um, known this changed like Coinbase and Binance, if we went to, uh, the darkness or the black market, it will show you all of that. It will show you a draft of the movement of the transactions. So even though people think, uh, they cannot get caught using cryptocurrency, there are ways to verify in traces or in fashion. It is not the easiest job to do, but it is not the most difficult one and it's not impossible.
Melissa Gragg:Well, and I think a lot of what I'm hearing is similar to many fraud investigations, which is if we don't have the central important pieces of information, we're looking all around and the outskirts to try to find a clue, a crumb, a something to kind of walk us through, um, some other patterns. So that, that makes a lot of sense. I just have a couple more questions. Cause I think you, you mentioned it and I don't re I had never really heard of this term that, um, but is there a difference between Bitcoin and is it a theory that you said, okay, what is the theory?
Carolina Martinez:So basically it is a type of currency. Bitcoin was the first one created, it was created. Uh, I can not remember exactly where it was, but, um, I, from 2013 and it was the first one, any, the one with the most volume right now. Um, the difference between this shoe is that, uh, there were creating two different machines and one is older than the other one has more value right now than the other wishes Bitcoins. Um, and you can go for those, uh, technically you cannot, if you, you were talking about dosh coins. So yeah, that's another type of priests occurrences there. So many types of cryptocurrency right now have more value than the other because of the way that they were created and the way that, um, they show more privacy, more protection and they make people feel safer. I cannot go into the germ wish when you should choose, but I'm there to put it in simple terms. They're just two different types of cryptocurrency. Uh, right now, if you want to get into, into buying Bitcoin, then you will need a lot more money than buying ETF.
Melissa Gragg:Okay. Gotcha. And it's like with anything, I mean, if you're in gonna invest in something, you know, you need to do your own due diligence or work with a professional and diversify, you know, I mean, don't put all your literal coins in one basket or wallet at any capacity. Um, I think if we want to just summarize, you know, do we want to say there's kind of a couple misconceptions about cryptocurrency and what do you think are the biggest ones? Cause we've talked about a lot of stuff today, but are, is there anything we didn't cover or anything that you just want to like clarify in a really easy way?
Carolina Martinez:The biggest one that I have seen from clients is that they do not have to report anything to the IRS because it is supposed to be private and confidential. You do have to self-report you had to make sure that you yourself report to capital gain losses from cradle and your income from curious. So, and there is no such thing as 100% private because even though your name is not out there, the blockchain ledger is public and people can see the transactions. And if something happens, if you get into a nasty divorce later on, you will have to provide that information. So it's better to be off front. Uh, another misconception is that, um, there's a lot of YouTubers out there sending people invest in crystal and then open an LLC and make it an escort. No, no, you cannot. Just because you bought$10 in cryptocurrency, open egg company, because there is a lot more things that go into it. And one thing that is my pet peeve is do not listen to everything you said on YouTube. There is a lot of people that they know what they're doing, and they just saying things on YouTube because they just want more views and more money from you to
Melissa Gragg:Well, and I think that, you know, a lot of people were paying attention. All of a sudden when dojo coin came out and, you know, made a run on the market. Um, but I also think that people didn't look much beyond that. Right. They're just like, oh, okay, great me. Let me go in and make three times my money in a night, you know? And that's never how it all works. Um, but I, I think it got it to me, it at least got people talking about it. More people may be interested in like, okay, if that could happen, what does that actually mean for this? Um, so I think that that was good because it is, you know, something that, a topic right now that people are saying, oh gosh, stay away. It's scary. Or, you know, yes, invest everything. You know, this is how we do it. So yeah.
Carolina Martinez:And you say, now that you save that, that ease is scary. It is true. A lot of people say that it's a scary, but I do think that cryptocurrency has no going away. And if you do really understand how we work, then, um, you can get into it and make sure that you take all the risks of the procedures to protect the cryptocurrency. But cryptocurrency has no going away. It is going to be the money of the future. And I do believe that it's, um, is gonna get bigger and bigger because now even banks are getting into it. Once they get their hands into it, even though the, of the community don't want them to get into, because that's the purpose of the cryptocurrency to be as decentralized, to not be controlled by any bank is just principle currency. It may be scary for a lot of people, but if you see it for, uh, let's say, in Africa or any other countries that they do not have the, uh, resources that we have in the us, they can have their family members that are in the us, send them money through cryptocurrency, and they don't have to pay fees to those companies that send that work, sending money and liking their SAR by the alerts they have. Now, they use it as an, on a daily basis that you don't have to go to the bank to get your money. You can just go to an ATM and get in, get your money or vice callings. So it is something that is going to be the future is just that we still have more room to grow and understanding how we work, any stops to the people that are in it to make sure that they educate the vast majority of the, of the population we need to educate people. We need to, even though there's the, the community, the cryptocurrency community, the vast majority do no one regulation, um, a person that I want regulation to a certain point to the sense that we need to prevent people from getting into it and just can losers' and steal money from people. That's the thing that we need to prevent from happening, but it's going to be something that is going to say, it's not something that is going away. We just need to understand that it will keep changing the business. Something that I say that is changes by the minute, but it's going to be, it will keep changing just to keep up. And that's why a lot of government agency and a lot of banks are afraid. And that's why they want to make you seem that is something scary because they will lose a lot of money. The banks are going to start losing a lot of money. So they don't want people to get their hands into crypto currency because as I said, it's decentralized. Um, and it's right now, it's not that regulated, but if we're getting that common ground, the banks, the government and the, the public gets into a common ground where we can make it work for everybody, then I think is going to be great. It's going to take a long time, but it's going to happen so, or later,
Melissa Gragg:And you, I think you bring up another point that I'll just ask a simple question is that, you know, it seems like there's some tremendous benefits for businesses to also get in because, you know, I'm thinking even our business, right? Like when people pay us, if they pay us by a credit card or through our online, we're paying the 3% to transact that, you know, and so that, and then as kind of the borders, you know, start to blur now that we're even in the pandemic economy, we've kind of started to be able to maybe do business a little bit further and wider than we could before there could be implications for even international transactions that could be, um, beneficial for our business. Right?
Carolina Martinez:Correct. And so give me an example. Let's say now people are buying houses and property with cryptocurrency. They will say that a lot less money in fees. If they do a cryptocurrency, because, you know, you have to be wire transfer fees. You will have to say lawyers for the escrow account fees and it gets complicated. So if we're businesses is, is I think it's going to be very good and it's good. I have a lot of clients that they're have open business, or they have decided that they're gonna start taking cryptocurrency. And, um, we help them with the accounting and the taxes and all that. And we give them, um, financial advice on how their based on their financial situation, their financial statements and how the, the facets are looking and basically task planning advice. So for businesses, as you said, there's a lot of transactions happen quickly. Ashley, let's say you send a wire Shafford depending on the bank. It could say from five minutes to even days, but if you do it on the blushing is takes, it takes seconds. That's why you had to make sure that when you do it, you do it the right way. So you can have your money in your wallet or exchange within seconds. You don't have to wait for the bank to process it or for the bank to have their, their compliance department call you. Like it happens sometimes that you process a wire and they call you. And they went to verify the other day, I processed that wire from one of our companies and they call me, they wanted to use, they asked me for my driver license number for my address or my social security, all of that with the blockchain and cryptocurrency, you avoid all of that, you know, that you're spending the money to the other person or they need to live within seconds.
Melissa Gragg:Um, no, I mean, I mean, it's, I think it's very fascinating. I think that everybody's going to have to escalate. And to me, the interesting part is the ledger, right? The blockchain ledger, and we use ledger and accounting and finance for a certain reason, but basically they're keeping track. And so I could see that in the future, maybe not now, but in the future, if the IRS comes to audit a big client, they could easily say, you know, one of the question's going to be like, do you have any crypto wallets? And they can go back up to the blockchain and look at any transactions in that wallet. Oh, you didn't file any taxes for this to, you know, so I think that you do have to be very careful because the mechanisms are in place to track it. It's just that there might not be the connection of, you know, everybody getting that information, right?
Carolina Martinez:Yeah. They're there already do it at the IRS is already doing it. So you will have, you will find people that they would receive a letter from the IRS saying you have a$25,000 bills because you did not report this in your tax returns. And right now in your, in your 10 40, you weren't required to, they ask a questions that you participate in cryptocurrency, and you have to say yes or no. And if you say no, and you are actually participated, that will also complicate your case. You lied to the IRS, right? They do have, they, they use those, uh, crystal investigator, uh, tools that I told you about those, the software and these firms that are already, uh, know how to work with that is they're not that advanced yet. And they are just getting into a few people. But in the future, like you said, it's going to be very hard for someone to hide it from them.
Melissa Gragg:Yeah, no, it's, it's very interesting. And I think that, you know, we've done so much educating today. I love how you explain things. I really appreciate it. But at this point, you know, people are probably like, I need to know some information about this, like what is going on. So if they want to reach out to Carolina, how are they going to reach out to you? And what kind of services do you provide? Because it seems like you really have the depth of knowledge in crypto, but how can you help people?
Carolina Martinez:So, um, I have my own company, my own, my company's deeper accounting, but I'm also a partner in another CPA firm, polygon advisory group. And I'm also a CFO, um, VPN capital group. So I always suggest people to go to my LinkedIn profile. Um, I do post a lot of things, uh, about crates. So a lot of news, a lot of things, uh, showing my perspective of, um, some critical, uh, information. And you can go to my LinkedIn profile, look at it. You can decide which one you want, which type of information you want from me. And you can either access my website, which is the pro accounting.com. Or you can go book an appointment with me through my website, or you can send me a message through LinkedIn. However you prefer. Because as I said, I'm part of the different companies, which all of them have to do with currency.
Melissa Gragg:Yeah. And that's how we kind of started paying attention to what you were doing, because you were very active on LinkedIn and you are able to talk about crypto in a way that I can understand. Um, and I think, you know, it was refreshing when you said that crypto is changing so quickly because I swear every time I try to get into it for a valuation purpose or something like that, I'm just like, it's overwhelming. It seems like the information that I thought I knew. I didn't know. So maybe it's just changing so fast. So that, that makes me feel a little bit.
Carolina Martinez:Yeah, it changes by the second. So the work is that even myself, I feel overwhelmed sometimes. Like I was having a conversation with a client yesterday and then he just started talking about something I never heard before. So while I was talking with the client, I looked it up online because there's something always coming up by the second and you just have to keep up with.
Melissa Gragg:Yeah, well, that's awesome. Well, that, that means that we'll probably reach back out to you in, uh, in six months to a year and be like, it's all changed. But maybe at that time, I would hope that I would try to get more information and maybe even try to invest because I did, when that whole dojo coin thing, I was like, okay, I want to get in. I want to get in what's going on. And then I was like, I don't, how do I even buy this? Like this? So it is a learning curve for sure. But we appreciate all of your information Carolina and we all have you on again. Thank you.
Carolina Martinez:And thank you for having
Melissa Gragg:Me. Yeah. So of course.