It is trite law, in order for parties to divide their assets, following the separation, all assets have to be listed with the relevant values either agreed, or valued. However, sometimes assets “disappear”, and from the following, it can be seen how easy some parties get away with hiding funds, or repercussions of doing so, if caught.
What is not in the asset pool, cannot be divided. What cannot be found, cannot be divided.
Cryptocurrency in Separation: Property or Puzzle?
In the world of family law, digital assets like Bitcoin and Ethereum are no longer fringe curiosities. With transfers ranging from modest sums to million-dollar wallets, cryptocurrency has become a high-stakes player in property settlement matters. The law treats crypto just like any other traditional asset. Whether it’s a beachfront home or a blockchain wallet, it must be disclosed, valued and divided.
Disclosure Duties: No Exceptions for Digital Assets
The duty to provide full and frank disclose extends to cryptocurrency holdings regardless of when they were acquired, how much they’re worth or whether they’re actively traded. Disclosure usually involves providing records from cryptocurrency exchanges, transaction histories, and wallet addresses. Dealing with the unique nature of cryptocurrency presents complexities that often require specialised forensic investigation for several reasons:
- Digital assets are highly mobile
- Wallets can be stored on USB devices, phones, or cloud-based services
- The value of cryptocurrencies can shift significantly in short periods
- Transfer can be made without leaving a clear paper trail
Uncovering Crypto Clues
In separations, one party often holds the upper hand in financial or digital literacy. Because wallets can be created anonymously and accessed from anywhere, the risk of deliberate non-disclosure is high. Assets can be split into multiple transactions, converted into alternative cryptocurrencies or moved through decentralised platforms that fall outside the reach of most institutional oversight. Some of the key indicators that may point to hidden digital assets include:
- Transfers to or from known crypto exchanges in banking records
- References to wallets, trading platforms or digital assets in communications or documentation
- Evidence of past crypto activity that is not reflective in current disclosures
- Devices or apps associated with crypto holdings, such as cold wallets or seed phrase storage tools
Given the private and decentralised nature of cryptocurrency, uncovering undisclosed digital assets often requires a combination of investigative strategies including:
- Reviewing bank and credit card statements for transactions linked to crypto exchanges
- Examining tax records for declaration of cryptocurrency-related income or capital gains
- Requesting records from Australian or overseas exchanges via subpoenas
- Analysing email records and digital correspondence for references to asset activity
Consequences of Crypto Concealment
Courts are no longer crypto-illiterate. They’re increasingly willing to engage with digital assets and can draw adverse inferences where there is suspicion that a party is hiding assets. Where there is suspicion of non-disclosure or fraud the Court may:
- Reverse the burden of proof to the party accused of concealment
- Make adjusted orders and settlements to penalise non-disclosure
- Order costs against the dishonest party
A leading example of how the courts handle digital assets in property settlement is found in the case of Muir & Rodelo. In this matter, the husband unilaterally transferred and attempted to conceal a substantial amount of cryptocurrency during and after the relationship. Although the wife had physical possession of a hardware wallet (USB), she had no functional access to the cryptocurrency. The husband’s exclusive management and lack of disclosure played a pivotal role in the Court’s decision to adjust the property division to 55% in favour of the wife. The Court thus “balanced the books” somewhat.
How Courts Handle Crypto in Settlement
Once the digital assets have been identified and valued, the Court must decide how to treat it in the overall division:
- As a discrete asset: It can be retained by the holder and accounted for in the property division.
- As a financial resource: If the crypto is illiquid, uncertain, or subject to loss, it may be treated more like a potential future benefit.
- Sell and divide: In some cases, the Court may order the sale or transfer of crypto, but this is rare due to complexity and market risks.
Crypto Literacy in Your Family Law Matter
As cryptocurrency becomes more mainstream, its volatility and concealment potential demands sharp legal and technical awareness. Whether you hold digital assets or suspect your former partner does, you must be prepared to address these issues with the necessary legal and financial expertise.
If you’re going through a separation and cryptocurrency is part of your financial picture, seek early legal advice to ensure your rights are protected and obligations met. Delays in identifying or investigating digital assets can significantly limit the ability to locate, value and recover them.
At Ramsden Family Law, we’re fluent in the language of all matters, Family law, including, digital assets. Our experienced team can help you navigate the crypto maze with clarity and confidence. Book your free 30-minute consultation with our expert family lawyers today!
