only.Crypto Divorce: A Growing Threat for Married Millennials

Divorce always raises thorny questions about how to divide marital property. In most cases, the remedy is a clean‑cut split of assets—though you can’t do that with the family dog or a prized aquarium. What makes the calculus more complex today is cryptocurrency.

Crypto wealth is still a relatively new component of many household balance sheets, and the recent plunge in digital assets such as bitcoin and ether has shaken investor confidence. Yet for a growing number of married Americans, the current market price of crypto is irrelevant because the assets can be hidden from a spouse with a few clicks.

“In divorce cases, crypto is creating the same headaches we’ve long seen with offshore accounts, except now the assets can be moved instantly and invisibly,” said Mark Grabowski, a professor of cyber law and digital ethics at Adelphi University. “Ownership isn’t determined by a name on an account—it’s determined by who holds the private keys.”

If one spouse controls the wallet, they effectively control the assets. Attorneys now have to subpoena exchanges, trace blockchain transactions, and determine whether a coin was acquired before or during the marriage. “Without transparent reporting standards, it’s easy for one party to hide or under‑report holdings. Courts are still catching up,” Grabowski added.

In theory, a crypto divorce should follow the same rules as any other property division. Renee Bauer, a divorce attorney who has handled several crypto splits, says the most basic question—who gets the wallet?—opens a Pandora’s box of complications that traditional property law never faced.

The first hurdle is discovery. “A retirement account comes with statements, a house comes with an address. Crypto may be sitting on an exchange or in a hardware wallet that one spouse conveniently forgets to mention,” Bauer explained. Tracing the assets becomes a blend of detective work and digital forensics.

Once the existence of a digital asset is verified, the parties must decide how to handle custody. Some spouses want to keep the original wallet intact, especially if they managed it throughout the marriage; others prefer a clean monetary split. Courts are still developing standards for both scenarios.

Security is another concern. Handing over private keys transfers total control, while refusing to do so forces a judge to decide how to enforce access. Bauer recounted a case where a lawyer tried to compensate a spouse with a different asset, ignoring the fact that crypto’s value is volatile and not easily interchangeable.

Many family‑law practitioners still lack the expertise to request crypto disclosures. In states such as Connecticut, there isn’t even a dedicated line for digital assets on the financial affidavit, which can lead to significant under‑valuation of a marital estate.

Crypto investigators: the new private‑eye specialists

BlockSquared Forensics, a Texas‑based firm founded in 2023, has seen demand for its services soar. Founder and CEO Ryan Settles says the company is often called in when one spouse suspects the other is hiding crypto—an issue that appears more frequently in high‑net‑worth divorces.

BlockSquared conducts everything from simple asset verifications to deep‑trace investigations that follow crypto across exchanges, wallets, and even international jurisdictions. The firm then delivers a “storyboard” that timestamps each movement of the cryptocurrency in question.

“Millennials hold the highest share of crypto, and many are entering the peak divorce years,” Settles noted. “That convergence is driving a surge in crypto‑related divorce cases.” He also highlighted the tax dimension: every crypto transaction can trigger a taxable event, and many divorcing couples are blindsided by capital‑gains liabilities after a split.

Because the IRS’s reporting requirements for crypto are set to tighten beginning with the 2025 tax year, attorneys and clients alike must pay closer attention to compliance. Settles warned that most lawyers “nod and smile” without fully understanding the technical and tax implications, leaving clients exposed.

BlockSquared’s retainer starts at $9,000, with full investigations often exceeding $50,000—costs that can surpass traditional legal fees, underscoring the high stakes involved.

Legal theory versus technical reality

Roman Beck, a professor at Bentley University and director of the Crypto Ledger Lab, argues that courts should treat cryptocurrency as property, not as money. “For tax and property‑law purposes, crypto is simply an asset,” he said. “The real legal question isn’t ‘who gets the wallet?’ but ‘how do we allocate the economic value the wallet represents, and who retains technical custody afterward?’”

Courts therefore have three practical options:

• Split the holdings on‑chain, creating separate wallets for each party;
• Sell the crypto and divide the fiat proceeds;
• Offset the crypto value against other marital assets.

From a technical standpoint, a wallet is just a set of private keys, often spread across hardware devices, mobile apps, or handwritten seed phrases. “You cannot safely share a hardware wallet or private key after a divorce,” Beck warned.

Volatility adds another layer of complexity. In the past two months, bitcoin has dropped from a high of over $126,000 to the low $80,000s—a roughly 35% decline—making timing a critical factor in any settlement.

One pragmatic solution is to split the wallet on‑chain so each party retains ownership of their share without an immediate sale. If a spouse is uncomfortable managing a wallet, the couple could appoint a neutral third‑party custodian to hold the assets until market conditions improve, at which point the crypto would be liquidated and the proceeds divided.

In practice, most couples simply want closure and opt for an immediate cash settlement, even if it means selling at a loss.

Blockchain transparency and the future of family law

Despite its reputation for anonymity, public blockchains like bitcoin and ethereum provide a permanent, auditable record of every transaction. “The ledger is a patient financial witness,” Beck observed. “The real frontier isn’t the law; it’s the forensics.”

Recent surveys estimate that 14%‑17% of U.S. adults have owned cryptocurrency, a penetration rate that forces family‑law courts to become more data‑driven. Transparent ledgers combined with sophisticated analytics give judges and attorneys a clearer view of a spouse’s financial behavior than ever before.

However, that transparency also encourages asset‑hiding tactics. Settles noted that once a divorce filing is anticipated, a savvy spouse can quickly move crypto through mixers or obscure wallets—often within minutes of the filing.

The policy question moving forward isn’t whether assets can be traced, but how far courts will require that level of scrutiny in everyday divorces.