As cryptocurrency continues to grow in popularity, it is becoming more common in divorce proceedings. What began as a niche investment has now become a mainstream financial tool, with millions of Americans holding some form of digital currency. Bitcoin, Ethereum, and other coins are routinely used not only for investment but also for international transfers, business operations, and private transactions.
In divorce cases, this presents a unique problem. While digital currency can be a legitimate asset, it is also one of the easiest ways for a spouse to hide, transfer, and move money internationally if the proper steps are not taken early in a case. Transactions can occur instantly, accounts can be created anonymously, and funds can be stored in digital wallets that are not tied to traditional banks.
As a Family Law attorney, I have seen a significant increase in cases where cryptocurrency plays a role in disputes over income, equitable distribution, and attorneys’ fees. Unlike traditional financial accounts, cryptocurrency can be held under third-party names, tied to business entities, or stored in digital wallets that are difficult to detect without aggressive discovery and professional tracing.
Florida Requires Disclosure, But Enforcement Is the Challenge
Florida’s mandatory disclosure rules under Rule 12.285 require parties to disclose virtual currency, just like any other asset. This includes cryptocurrency held individually, through businesses, or in investment accounts. On paper, the rule is clear. In practice, however, enforcement is the challenge.
Many parties attempt to hide cryptocurrency accounts under different names, businesses, or third parties. Others claim that digital currency transfers are for investment or fundraising purposes, especially when tied to startups or closely held companies. In reality, these transfers are often used to move marital funds offshore or beyond the reach of the court. Because blockchain transactions do not resemble traditional bank activity, they are often overlooked unless specifically targeted in discovery.
This is why financial affidavits and bank statements alone are rarely enough in cases involving digital assets.
The Role of the Forensic Accountant
In cases involving cryptocurrency, a forensic accountant is often essential. While blockchain technology is designed to be transparent, the identities behind transactions are not always obvious. A forensic accountant trained in digital asset tracing can follow cryptocurrency through multiple wallets, exchanges, and business entities, even when parties attempt to disguise ownership.
This work is crucial for:
- Identifying hidden or undisclosed marital assets;
- Tracing dissipation or improper transfers; and
- Determining income when cryptocurrency is used as compensation or investment income. Forensic analysis often impacts equitable distribution, support determinations, and attorneys’ fees. Without it, a significant portion of the marital estate can disappear undetected.
Subpoenas Are Crucial
Subpoenas are often the only way to uncover the full scope of cryptocurrency holdings. Major exchanges, such as Coinbase, maintain detailed records that include account ownership, transaction histories, and transfer data. These records can reveal when accounts were opened, how funds were moved, and where they were sent.
These subpoenas should be included early in the case through standard requests for production and supplemented with targeted interrogatories as new information is uncovered. In many cases, early subpoenas prevent assets from being transferred or concealed before a forensic accountant has the opportunity to trace them.
If you suspect cryptocurrency may be involved in your divorce, addressing it early can make a significant difference in protecting your financial future and ensuring a fair outcome. Contact me at [email protected] with any questions.
