## Millennials' Divorce Dilemma: Why Is Crypto Asset Division So Difficult?

**The Cryptocurrency Trap in Unilateral Divorce Proceedings**

Divorce is already complicated enough, but what if your spouse has accumulated a huge amount of cryptocurrency without your knowledge? This is becoming an increasingly common reality—and the US legal system is completely unprepared to handle such situations.

According to survey data, 14% to 17% of American adults have held cryptocurrencies. More importantly, the group with the most crypto holdings is Millennials. Not only do they invest the most in cryptocurrencies, but they are also currently entering a high-divorce period. Coupled with Bitcoin's recent drop from a high of $126,000 to around $80,000—a 35% decline—the issue of asset division during divorce has become even more complicated.

## Invisible Assets: The Biggest Issue in Modern Divorce

Ryan Settles, founder of BlockSquared Forensics, a Texas-based company specializing in crypto asset investigations, pointed out a harsh reality: most of their clients are women, and their primary concern is not how to divide assets but—**they simply don’t know how much cryptocurrency their husbands hold**.

This is no small matter. Unlike real estate, which requires deeds, or bank accounts with statements, cryptocurrencies can be hidden on exchanges or stored in hardware wallets that the other party "happens to forget to mention." Crypto assets are more clandestine than traditional offshore accounts because they support instant, trace-free transfers.

Mark Grabowski, a professor of cyber law at Edify University, explained the key: ownership of crypto assets is not determined by the account name but by who controls the private keys. Simply put, whoever holds the wallet password has actual control over these assets. As long as one party controls the wallet, they effectively control the entire asset.

## Legal Lag: Lawyers Are Also in the Dark

In the US, unilateral divorce procedures have gradually improved, but the emergence of cryptocurrencies has disrupted this system. Many states’ financial affidavits lack sections for cryptocurrencies, leading to a serious consequence: if the other party does not voluntarily disclose, and lawyers are unaware of the need to investigate, a potentially hundreds-of-thousands-of-dollars asset could "disappear" entirely.

Renee Bauer, a divorce lawyer experienced in crypto asset division, once encountered a lawyer who knew nothing about cryptocurrencies. He tried to simply convert Bitcoin into other assets to compensate the other party— but this approach is neither fair nor free from unpredictable tax issues.

Tracking crypto assets involves detective work and digital forensics. Lawyers must:
- Subpoena exchange records
- Trace blockchain transaction traces
- Confirm whether assets were purchased before or after marriage
- Identify if assets were transferred into mixing services to conceal them

However, due to the lack of transparency standards and unified reporting requirements, one party can easily hide or underreport their crypto holdings. Courts are still trying to catch up in this field.

## The Clash of Technology and Law: How to Truly Divide?

Roman Beck, professor at Bentley University and head of the Crypto Ledger Lab, proposed an important correction: **courts are not dividing the wallets themselves but the economic value they represent**.

Legally, Bitcoin, Ethereum, stablecoins, and even NFTs are considered property, not currency. This means that crypto assets acquired during marriage are marital property, and the division should be similar to dividing real estate or securities accounts—just with more complex technical implementation.

Divorcing couples have three main options:

**1. On-chain Direct Division**
Create new wallets for each party and directly split assets on the blockchain. This allows both parties to retain their shares without immediately selling.

**2. Sale and Division of Fiat Currency**
Liquidate all crypto assets and divide the proceeds in USD or other fiat currencies. This avoids technical complexity but may trigger capital gains taxes.

**3. Compensation with Other Assets**
One party retains all crypto assets, compensating the other with real estate, cash, or other assets.

But there’s a practical issue: wallets are essentially a set of private keys stored on hardware devices, mobile apps, or paper mnemonic phrases. After divorce, the two parties cannot safely share the same hardware wallet or private keys. If one party hands over the private key, they relinquish full control of the assets; if they refuse, the court must find ways to enforce.

## Volatility and Taxation: Double Blow

Crypto prices are highly volatile, adding another layer of complexity. In just the past two months, Bitcoin has fallen from over $126,000 to around $80,000. Such sharp fluctuations make it difficult for both parties to agree on the optimal timing for division.

Tax issues are even more troublesome. The IRS’s reporting requirements for cryptocurrencies are relatively lenient, which exacerbates the problem. Selling crypto to divide assets triggers capital gains tax, while holding assets during value swings can lead to new disputes. Many lawyers do not fully understand these tax details.

Ryan Settles from BlockSquared Forensics pointed out that in many cases he handles, wives not only are unaware of their husbands’ crypto investments but also face huge tax bills due to capital gains after the assets are finally divided.

## Digital Forensics and Blockchain Transparency

The good news is: despite the reputation of cryptocurrencies as "anonymous havens," public blockchains are inherently transparent ledgers, with every transaction permanently recorded. This actually makes tracking easier.

Roman Beck said that blockchain has become "a very patient financial witness." As long as you know how to interpret blockchain data, you can find perfect audit trails—something impossible in the cash era. When someone tries to hide assets, these actions usually reveal themselves on the ledger within 20 minutes—especially when assets are transferred into mixing services, where transfer traces become even more apparent.

## The Rise of Professional Investigators

Because of these challenges, a new industry has emerged. Since its founding in 2023, demand for BlockSquared Forensics’ services has grown exponentially. They specialize in helping people trace hidden crypto assets in divorce cases.

From simple asset verification to cross-state tracking of crypto flows and deep investigations into wallets and exchanges, these companies can provide services. Investigation fees can reach up to $50,000, with pre-hire costs of $9,000—often exceeding lawyer fees.

Settles also notes that clients usually only commission such companies when they have strong reasons to suspect their spouse is hiding large amounts of crypto assets.

## Outlook: Can the Law Keep Up?

Currently, the US legal system is striving to catch up with the challenges posed by cryptocurrencies. The key issue is not whether we can track assets—blockchain itself provides sufficient transparency—but how much courts will require in terms of scrutiny in routine divorce cases.

For Millennials entering a high-divorce period, what does this mean? It means that if you are considering filing for divorce unilaterally, don’t forget to ask about your spouse’s crypto assets. This is not a minor detail; it could be the most important issue in your divorce case.