Cryptocurrency and Your Divorce

Cryptocurrency is a new type of currency. It is a digital asset that is bought, sold, and traded on specific online platforms. The value of cryptocurrency fluctuates and has an exchange rate just like other currencies. There are thousands of types of cryptocurrency, but the most popular and well-known is Bitcoin.

Cryptocurrency exists through linked digital records called blockchain. Cryptocurrency is set up to be a secure asset. To access cryptocurrency, the owner must access it using a wallet which is essentially a secured password and login information. Cryptocurrency is a concern during a divorce because it can be easy to hide and difficult to trace and thus can be used to conceal large amounts of money, effectively taking it out of the divorce property division.

Cryptocurrency in Divorce

All assets acquired during a marriage are shared marital property (with a few exceptions for instances such as inheritances, gifts, and personal injury awards). Cryptocurrency is a type of asset that is included in the divorce if either spouse obtained it during the marriage. If cryptocurrency is owned by either spouse and acquired during the marriage, it must be disclosed as a asset to the court and the other side. The currency then will be valued by the court, and ownership of it will be divided as part of the property division in the judgment of divorce.

Protecting Cryptocurrency

The most important thing to keep in mind when it comes to cryptocurrency is that you must preserve all the information regarding it for the divorce court. So, as a rule, never delete any information about the currency and if you are the spouse in possession of the wallet, be sure to keep that information safe.

Just as with any other marital asset, if you use it, give it away, or destroy it, this is considered wasting a marital asset. Wasting is a legal term that essentially means you have eradicated the asset to prevent your spouse from getting it or receiving part of it in the divorce judgment. There are severe consequences for wasting a marital asset.

Locating Cryptocurrency

Your attorney and the court must be made aware of any cryptocurrency ownership since you could hold large amounts of marital assets in this type of currency. If you or your spouse owns cryptocurrency, it must be disclosed in your financial affidavits, which are required in all divorces. However, because cryptocurrency is an encrypted all-digital asset and is a relatively new currency, it can be easy to conceal. This is a growing area of concern in divorce cases.

If your spouse has in the past expressed an interest in cryptocurrency, talked about owning it, has friends or close colleagues who own or trade it, or researched the topic, this is a clue that they may own some that you are not aware of.

If your spouse bought cryptocurrency, there might be some financial records supporting the purchase, but they may be difficult for you to locate on your own. The actual purchase of the currency from a crypto-trading platform may be your only clue that it exists since all other records and information can be easy to conceal. There also may be a hard copy wallet which may look like a portable hard drive containing the crucial log-in information for the currency.

If a wallet is located, the transaction history can be obtained from it. There may also be email receipts for the transactions. If your spouse intends to conceal ownership of cryptocurrency, it is likely that secret email addresses were used, though. Furthermore, there may also be tax documents sent to your spouse with regard to the transactions.

If you suspect your spouse owns cryptocurrency and is not disclosing it, there are some alternate ways you can try to find evidence of its existence. First, check your spouse’s app store to see if they have downloaded any cryptocurrency wallets or apps. This is a sign that they may own some cryptocurrency. You can also check to see if your spouse has a lot of Paypal transactions since you can use Paypal to purchase and sell cryptocurrency.

Another way to track down potential holdings is to look for a significant amount of Amazon purchases by your spouse. One method of obtaining cryptocurrency is to purchase items on Amazon using credit cards, which are then sent to a person holding cryptocurrency. That person then deposits cryptocurrency into your spouse’s wallet, and then there is no direct financial trail showing an actual purchase of the currency.

If you believe your spouse owns cryptocurrency or may own some, be sure to tell your attorney about this. Your attorney can ask for information about this during discovery and issue subpoenas to try to gather facts about this. A forensic accountant and a cyber expert may also be needed to determine if any cryptocurrency was purchased or traded during the marriage by your spouse.

Division of Cryptocurrency

Once it is located, cryptocurrency is treated like any other marital asset by the divorce court. It will be included in the total of all marital assets and will be distributed in the judgment of divorce. The currency could be awarded to either spouse, or it could be divided between them. Be sure to talk to your attorney about your comfort level with cryptocurrency. If you don’t feel comfortable owning it, your attorney can argue that you should receive other assets in place of that.

If you are awarded cryptocurrency in your divorce judgment, be sure that you completely understand how it works, how to access it, how it is traded, as well as the tax implications of ownership. Like any other asset, its value can fluctuate, so you must be prepared to accept the risk that comes with ownership and have the knowledge necessary to manage the currency.


Dror Bikel

Dror Bikel co-founded Bikel Rosenthal & Schanfield, New York’s best known firm for high-conflict matrimonial disputes. A New York Superlawyer℠ and twice recognized (2020 and 2021) New York Divorce Trial Lawyer of the Year, Dror’s reputation as a fearsome advocate in difficult custody and divorce disputes has led him to deliver solid outcomes in some of New York’s most complex family law trials. Attorney Bikel is a frequent commentator on high profile divorces for national and international media outlets. His book The 1% Divorce - When Titans Clash was a 5-category Amazon bestseller.

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