Cryptocurrency Assets in Divorce


With over 25 million people in the US now owning cryptocurrency, cryptocurrency is all the rage, and divorce lawyers now encounter an increasing number of cases involving crypto assets. They have become a popular investment choice, especially among younger investors. They also present unique challenges because of their volatility and relative anonymity if a divorcing spouse attempts to hide it.

Cryptocurrency is Property in A Divorce

Cryptocurrency is property subject to property division in a divorce.  Not surprisingly, it is also treated as property for tax purposes. Though treated as marital property, cryptocurrency is unique.  Due to its volatility, it may be very difficult to accurately determine a value in dividing property. As cryptocurrencies continue to grow in value – and decline in value – during divorce proceedings, it is important to revalue cryptocurrency before the property division is made final.

Hiding Cryptocurrency Assets in A Divorce

When cryptocurrency is owned by a divorcing spouse, an additional concern is that the spouse may attempt to hide it. Since cryptocurrency is an untraditional asset held in relative anonymity (e.g., a Bitcoin wallet gives the owner a fake pseudonym), owning it may be alluring to people wanting to hide their assets.  It is also a new asset class, and an intangible tech-based asset, that is daunting to understand for a spouse lacking knowledge in digital currencies.

How to Uncover Hidden Cryptocurrency Assets

Spouses must fully disclose all assets in a Washington State divorce. Hiding assets in a divorce may result in losing up to 100% of an asset as a penalty in a property division, imputing of a party’s income, sanctions (fines), award of the other party’s attorney fees. If discovered after divorce, its grounds for reopening the divorce, and many divorce settlement agreements include an automatic award of hidden assets to the other spouse.

Cryptocurrency assets are discovered in several ways. The most common cryptocurrencies like Bitcoin may be found more easily than other less popular digital currencies. Requests for financial information and records are routinely made as part of the discovery process during a divorce. Such records as bank and other financial account statements, tax returns, trade confirmation emails, and loan applications, must generally be provided in response.

Accounts held in the US are generally easier to trace than accounts in other countries and can be required by a subpoena (court order) to produce financial information. Foreign financial institutions may not be as cooperative in complying with a subpoena from a Washington State court.

If necessary, a family law lawyer may ask for a court order demanding that computer records and any accounts with major cryptocurrency wallet providers be revealed. A forensic expert can then be hired to look for cryptocurrency tickers, login credentials to exchanges or keys stored in certain types of digital wallets.

Deciding How Much to Spend on an Investigation

The expense of finding undisclosed hidden cryptocurrency property may be significant, particularly if a forensic expert is needed. Forensic experts might require a hefty fee, and the amount potentially involved – and likely outcome – are key considerations in deciding whether to proceed. Of course, if a person is attempting to hide substantial sums of money in cryptocurrency in a high asset divorce, then finding hidden crypto assets using all available means is important to preserve a spouse’s rights to a fair property division. A family law attorney will aid in determining the scope and expense of the investigation needed.

If you or your spouse own cryptocurrency assets and you need legal help in determining your legal rights in a family law case, contact Seattle and Bellevue divorce attorneys at Weintraub Law Office by calling 425-374-4045 or easily schedule a consult online.