Origin of Crypto Assets in Divorce
A growing challenge for legal practice
An increasing number of people are falling victim to crypto fraud without realizing it at first. The websites look professional,
Cryptocurrencies are now firmly embedded in the financial landscape. Where crypto was once primarily seen as a niche investment, more and more individuals today hold digital assets such as Bitcoin, Ethereum, and other crypto-assets. For some of these investors, wealth has increased significantly in recent years due to early investments, price appreciation, or active trading. However, this also gives rise to new financial challenges, including in divorce proceedings.
For lawyers and notaries, gaining insight into the origin of crypto assets is becoming increasingly important. In practice, knowledge of crypto-assets in asset division cases is still often limited, while the financial stakes can be substantial.
We are seeing a clear increase in cases in which crypto assets are the subject of financial investigations. Based on our many years of experience as the market leader in the Netherlands in crypto tracing investigations in fraud cases, we now also successfully apply blockchain analytics in Source of Funds (SOF) investigations, as well as in cases involving hidden crypto assets in divorce proceedings.
Hidden Assets in the Digital World
A key difference between traditional assets and crypto-assets is that cryptocurrencies are not always managed through a central institution. Crypto can be held on regulated exchanges, but also in so-called self-custodial wallets: wallets that are fully under the user’s own control. Such wallets are not subject to central oversight.
This is precisely where complications often arise in divorce cases. When one of the partners suspects that crypto assets are being concealed, investigations often stop once assets are found to be held outside an exchange. Blockchain transactions are technically visible, but without specialist tools and expertise they are difficult to interpret.
With the help of advanced blockchain analytics software, DataExpert can also analyse self-custodial wallets and reconstruct financial flows. In doing so, we examine not only transactions, but also their consistency with statements from the individuals involved and historical values. This creates opportunities to make hidden assets visible.
Example Case: Hidden Assets in Divorce
In a recent case, the ex-husband suspected that his former partner had concealed crypto assets during the divorce settlement. He recalled that she had invested in a Bitcoin project during the marriage. When he asked about it at the time, she stated that it turned out to be a scam and that the entire investment had been lost.
Shortly after the divorce, however, the ex-wife purchased a luxury villa. This prompted the ex-husband to initiate further investigation into possible hidden crypto assets at the time of the divorce.
From that point on, it becomes complex for many legal professionals to independently verify the client’s statement. In such situations, DataExpert supports with specialist blockchain investigations and clear reports that can be used in legal proceedings.
Integrated Approach
Our investigations combine traditional financial analysis with in-depth blockchain analysis. We assess both custodial accounts (such as exchange accounts) and self-custodial wallets within a single integrated investigation. Verification of actual wallet ownership can also be part of the process, for example through a verification transaction or live validation.
Our investigators are certified at the highest level in blockchain analytics and anti-money laundering, and have years of experience in financial crime investigations. The resulting reports are prepared according to high forensic standards and can be used in legal proceedings.
For lawyers and notaries, this means one thing above all: greater control over an issue that is increasingly becoming part of complex divorce settlements and asset disputes.
Does your firm deal with clients where there are crypto assets, unclear origin of funds, or a suspicion of hidden assets in divorce cases? DataExpert is happy to discuss possible investigation and support options. Please feel free to contact us for advice or a no-obligation consultation.
By Anje Roosjen | November 11, 2024