Divorce involving cryptocurrency assets adds complexity due to challenges in identifying, valuing, and dividing digital assets. Proper discovery, documentation, and protective legal provisions can make it easier to manage crypto divisions much like traditional investments, ensuring fairness despite the crypto’s volatility and the potential for hidden holdings.
Cryptocurrency is no longer just niche investment. When divorce enters the picture, digital currency brings some additional challenges. Unlike traditional bank or brokerage accounts, cryptocurrency can be harder to trace, value, and divide. Here’s how divorcing couples can approach this increasingly common issue:
Identifying Cryptocurrency Holdings
One of the first steps in divorce is identifying all the marital assets. With cryptocurrency, this can be tricky. Many people hold crypto in online wallets such as Coinbase or Binance, which provide statements and screenshots like bank accounts.
However, not all crypto is stored in major exchanges. Some may be kept offline on a hard drive or USB, making it more difficult to detect. This is like finding hidden cash. Attorneys typically review bank and credit card statements for transfers to platforms like Coinbase, which can reveal whether cryptocurrency has been purchased.
Valuing and Dividing Crypto
Once identified, the next challenge is dividing cryptocurrency. Fortunately, this part can be relatively straightforward. Crypto can be split directly by transferring coins to another wallet, or it can be converted into cash before distribution.
In some cases, one spouse may keep the cryptocurrency while the other receives assets of equal value, such as cash or property. This strategy carries risk because cryptocurrency values fluctuate dramatically, sometimes changing thousands of dollars within a day. What seems like equal trade during divorce negotiations could become an uneven split later due to market volatility.
What if a spouse hides cryptocurrency during divorce?
Most marital settlement agreements include a clause stating that if undisclosed assets are discovered later, whether worth $1,000, $10,000, or more, they will automatically be divided 50/50. This protects both parties and reduces future disputes.
If no such provision exists, the wronged spouse typically has up to two years to file a motion to reopen the case and prove fraud. This process can be more challenging, so it is important that your settlement agreement includes protective language regarding hidden assets.
Cryptocurrency Issues Can be Addressed Successfully
Dealing with cryptocurrency in divorce adds complexity, but it is not insurmountable. With careful discovery, clear documentation, and smart legal safeguards, digital assets can be addressed just like traditional investments. The key is transparency and proper legal guidance, so that neither party is left at a disadvantage in the rapidly changing world of crypto.
The Law Offices of Patrick Markey, P.C., are located at 180 Stetson Avenue, Suite 3500 in Chicago, Illinois. You may call us at 312-223-1764.
Patrick Markey is a Chicago based attorney who is an advocate of no court divorce options. He believes Collaborative Divorce and Mediation create better outcomes to your divorce process.
Mr. Markey is a member of Super Lawyers, an elite group of the top 5% of top lawyers (https://www.superlawyers.com). He is also listed as a top divorce lawyer by AVVO (https://www.avvo.com) and is a fellow of Collaborative Divorce Illinois (https://collaborativedivorceillinois.org), as well as a member of The Chicago Bar Association (https://www.chicagobar.org)