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Divorce & Cryptocurrency: Is My Spouse Hiding Crypto?


Bitcoin, and other types of cryptocurrencies, appear to be more than a passing fad. In fact, it looks like crypto is here to stay. That fact becomes more evident with every passing day as more people take a chance and invest in cryptocurrency. You may be wondering, “Is more people investing in crypto a good thing or a bad thing?” Only time will tell. What we do know, however, is that as cryptocurrency rises in popularity, it is showing up more and more in divorce negotiations, and in some cases, that’s a very bad thing.

What Happens to Cryptocurrency During a Divorce?

When couples get married, they often say, “What’s mine is yours and what’s yours is mine.” Well, during a divorce, those types of sentiments usually go out the window, and instead each spouse declares, “What’s mine is mine and what’s yours is mine.” While that statement shouldn’t be taken literally, it’s not far off from the truth. During a divorce, seemingly everything is up for grabs, including the new kid on the block crypto.

Whether cryptocurrency can be considered a marital asset or not depends on several factors, including:

  • The state’s divorce laws
  • When and how the cryptocurrency was acquired
  • The details of any relevant prenuptial or postnuptial agreements
  • The circumstances of the divorce (this usually doesn’t apply in no-fault divorce states like Texas)

If cryptocurrency can be considered a marital asset, then just like any other asset, it can be divided between divorcing spouses. If you can find it, that is.

Could My Spouse Hide Money in Crypto?

Hiding assets during a divorce is nothing new. In some cases, rather than share assets with an ex, spouses will attempt to hide the property, so they can keep it for themselves. Some items are easier to hide than others. For instance, hiding a couple’s marital home is pretty much impossible. However, hiding an investment property that a soon-to-be ex-spouse never knew about is difficult but not impossible. More commonly items like foreign bank accounts, vehicles, stock options, and investments are what people try to keep hidden during divorce. However, in recent years, cryptocurrency has become a valuable tool for those looking to hide assets to avoid including them in a divorce settlement.

Cryptocurrency is notoriously difficult to trace, which makes it one of the best ways to hide assets. The reason that crypto is difficult to trace is because it can be stored in digital wallets, which are easy to hide. Plus, it is very easy to move cryptocurrency from one digital wallet to another without a trace. Finally, even if someone keeps their cryptocurrency in something more above board, like a crypto exchange, instead of a digital wallet, it still may not be traceable. This is because even though crypto exchanges can be subpoenaed for information under US law, that law does not apply to crypto exchanges based overseas. Therefore, hiding cryptocurrency can be as simple as storing it in a digital wallet or an overseas crypto exchange.

In addition to cryptocurrency being easy to hide because of how it’s stored, it is sometimes difficult to figure out if a person even owns any cryptocurrencies. This is because there are no financial institutions keeping track of crypto transactions. What this means is if a person is buying and selling cryptocurrency and not telling anyone about it, there’s no easy way to tell that they’re doing it or that those investments even exist.

Need Help with Property Division Involving Crypto? Contact Us!

Digging up hidden assets isn’t easy, especially something like crypto, which is designed to be untraceable. However, nothing is truly untraceable. Just like the technological advances that came before it, the world is catching up to crypto. Every day, those on the right side of the law are getting closer to figuring out ways to prove specific crypto transactions exist and track down the investors responsible for them.

The legal team at The Law Office of Derek S. Ritchie, PLLC is well-versed at protecting our clients’ rights and fighting to win during any type of divorce, including high net worth divorce proceedings. While cryptocurrency can play a factor in any type of divorce, it is an issue that crops up most often in high net worth divorces. These are the types of divorces that usually involve spouses attempting to hide assets, such as investments, art, jewelry, stock options, bank accounts, vehicles, homes, NFTs (non-fungible tokens), and cryptocurrencies.

For more information about property division involving cryptocurrency, or to discuss your situation and options with an experienced divorce lawyercontact us online or give us a call at (210) 702-2203 to schedule a complementary consultation.

The post Divorce & Cryptocurrency: Is My Spouse Hiding Crypto? appeared first on The Law Office of Derek S. Ritchie.

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