Crypto in divorce: lawyer outlines common red flags spouse may be hiding assets as disputes grow

From bitcoin to memecoins, digital assets are no longer fringe bets — they're showing up in everyday portfolios, mobile wallets, even grocery store ATM transactions — and now, divorce settlements. As cryptocurrency adoption grows, family lawyers are increasingly grappling with how to uncover, value, and divide holdings in contentious splits. What was once a niche asset class is now one of the most complex — and potentially largest — elements of the marital estate.

Modern prenups and postnups increasingly include clauses that define crypto as separate or marital property, outline valuation methods, and specify division terms in the event of divorce, Christopher R. Castellano, a principal at Joseph, Greenwald & Laake, told The Block.

However, some of the most common red flags that suggest a spouse may be concealing funds include unexplained cash withdrawals, a sudden tech interest, or references to crypto apps, exchanges, and wallets without additional information, according to Castellano. Asked whether he had seen an uptick in people hiding wealth via crypto in divorce cases, Castellano said attempts at full-scale concealing of wealth are uncommon, but "surreptitious use of marital money for crypto or concealing of crypto gains is becoming more prevalent."

Identification and valuation remain the biggest challenge

Because a divorce involves several categories of assets, having them identified at the same time with values that you are confident in and timed to coincide with a strong crypto market is the biggest challenge, Castellano explained.

"Ultimately, you can't rely on the value of crypto due to its volatility," he said, but "the court will typically consider the value assigned by the parties as to a particular asset or the trial date."

The pseudonymous nature of many crypto participants presents another challenge, particularly when combined with the use of non-KYC peer-to-peer platforms rather than centralized exchanges, for example.

However, courts can still issue discovery orders requiring full financial disclosure in response to a failure to produce documents, Castellano said, noting this applies even when someone has operated pseudonymously or via non-KYC platforms.

"The difficulty is less in asking for the court to issue relief and more in identifying the asset to begin with, which would likely require expert analysis and tracing to identify the particular asset," he said. If significant crypto transactions are involved, it makes sense to hire a forensic accountant with onchain expertise, he added.

Getting to grips with crypto's complexity

While the treatment of digital asset holdings in divorce proceedings remains a nascent field and case law is still developing, Castellano said courts will treat crypto like any other marital asset — subject to an equitable division based on factors such as contribution, dissipation, and economic circumstances.

Crypto and DeFi transactions can be complex to track and interpret, even for the most experienced users. Castellano noted that legal professionals' and courts' technical understanding is expanding as more information and resources become available, but as with any new legal development, they will often rely on expert testimony, and that's no different when dealing with complex crypto structures.

Ultimately, transparency is key as crypto becomes more common in marital estates, Castellano said. "Failure to properly disclose crypto can lead to serious legal consequences, and parties should consider involving tech-savvy professionals early in the process."

Having practiced family law since 2013, Castellano advises Maryland and D.C. clients on issues ranging from high-net-worth divorces, custody disputes, and pre- and postnuptial agreements, using risk/reward analysis to find the most beneficial case outcomes.