Hudson Intelligence

How to Find Digital Assets and Determine Value for Divorce

In divorce proceedings, both spouses are required to fully disclose all assets, including cryptocurrency and digital tokens. Failure to disclose assets can lead to revaluation of a property settlement — and, if omissions on financial disclosures are material and willful, they may lead to more serious consequences, such as findings of perjury or contempt. Yet tracking and properly valuing cryptocurrency can be complicated, particularly if one spouse has attempted to conceal their digital assets.

Hudson Intelligence locates, traces, and valuates cryptocurrency holdings to support equitable distribution in divorce proceedings. Divorce litigants and their legal counsel frequently turn to Hudson Intelligence for assistance in these areas:

• Locate cryptocurrency exchange accounts, self-custodial wallets and digital assets

• Forensically trace cryptocurrency transactions and investment activity

• Determine the destination and disposition of transferred funds

• Identify fraudulent conveyances of assets removed from marital estate

• Provide an independent valuation of cryptocurrency investments and digital asset portfolios

• Assess whether cryptocurrency investments are community property of both spouses — or sole and separate property of one spouse

• Identify relevant subpoena targets for undisclosed cryptocurrency accounts

• Analyze account records and transaction history produced by cryptocurrency exchanges

• Serve as expert witnesses to provide reliable, accurate and clear testimony

• Conduct comprehensive asset searches to identify cryptocurrency accounts and digital assets; bank and brokerage accounts; personal and family trusts; business interests, shell corporations and special-purpose entities; and undisclosed holdings in other asset classes.

Cryptocurrency can be a contentious and unfamiliar issue in divorce proceedings. Spouses and their legal counsel need to retain the right experts to educate the court. They also need to know what to seek and demand at every stage of litigation: from discovery, to depositions, to equitable division of marital assets.

Hidden Cryptocurrency and Financial Infidelity

In marital cases of financial infidelity, it has become increasingly common for so-called ‘monied spouses’ to attempt to conceal assets through undisclosed investments in cryptocurrency. Digital coins like Bitcoin (BTC) and Tether (USDT) are frequently believed to be highly anonymous and easy to hide. This makes them a popular – but imperfect – choice for wealth concealment. 

Forensic investigation can reveal hidden holdings of digital assets in self-custodial wallets, cryptocurrency exchange accounts, income-bearing decentralized finance (DeFi) stakes, nonfungible tokens (NFTs), metaverse properties and electronic payments. 

In the past five years, Hudson Intelligence has forensically traced more than $250 million in cryptocurrency and digital tokens. Across all asset classes – including digital assets, property and traditional financial accounts – Hudson has located more than $1.2 billion for our clients since 2011. Our findings are supported with expert testimony and courtroom-ready reports that convey facts and technical complexities in the clearest possible terms.

Confirming Suspicions of Concealed Cryptocurrency 

Nearly 20% of adults in the U.S. have owned cryptocurrency – with higher rates of ownership among men – according to published estimates. That’s roughly the same amount of Americans who buy and sell stocks in publicly traded companies. (Though it’s less than the 60% of Americans who own stocks and bonds indirectly through mutual funds and retirement plans.) These numbers, alone, tend to support a reasonable expectation that almost any married person of means could have some cryptocurrency stashed away — somewhere.

Spouses who have been excluded from cryptocurrency investments and decision-making in family finances can be at a serious disadvantage during divorce, unless those missing assets can be located through independent means. Spouses who are hiding cryptocurrency may attempt to cover their tracks on the blockchain by moving money through intermediary addresses, changing wallets, jumping chains and swapping assets.

Fortunately, expert forensic investigators with state-of-art blockchain intelligence tools can cut through many layers of this kind of obfuscation – connecting the dots at every step, from the moment the money leaves a bank account until it arrives at its ultimate digital destination. Exposing a secret stash of crypto in divorce court can show that an opposing spouse has been acting in bad faith, particularly if they have repeatedly failed to disclose such assets.

Understanding Custody of Cryptocurrency Assets

Cryptocurrency Exchange Accounts: One of the most common methods to acquire and store cryptocurrency in through a customer account at a major cryptocurrency exchange.

Hudson Intelligence has pioneered investigative methods for locating undisclosed accounts at major cryptocurrency exchanges and electronic payment providers. We also have extensive experience in tracing digital assets, analyzing cryptocurrency activity, and providing highly credible expert opinions. 

Self-Custodial Wallets: Outside of exchanges, cryptocurrency can be stored and operated with self-custodial wallets (sometimes known as non-custodial wallets) in which the user has sole control over their private keys. Because the owner has custody over their own assets, there is no service provider or third-party that can be subpoenaed to produce account records.

Fortunately, forensic investigators and blockchain intelligence analysts can develop information regarding self-custodial wallets, tracing their transaction history and current balances, and mapping interactions with relevant counterparties and exchange accounts. 

Alternative Digital Investments: Virtual assets may also be staked in interest-bearing decentralized finance (DeFi) applications; represented as a digital properties in the metaverse; or collected in the form of nonfungible tokens (NFTs). These financial activities are all traceable, to varying degrees, on the blockchain. 

Where to Look for Crypto Clues (And What to Look For)

When a spouse abandons the marital residence and leaves behind an accumulation of personal records, they may include valuable information on financial activities. Other asset-related clues can sometimes be found through inspection of abandoned laptops, cell phones, tablets or other devices. In these situations, it is important to know where to look – and how to recognize relevant information once you’ve found it.

Bank Records: Account statements from known bank, brokerage and credit card accounts should be scrutinized for past transfers to/from cryptocurrency exchanges and virtual asset service providers. Forensic review of banking records should be conducted by a professional who is familiar with cryptocurrency transactions. Statement lines might not explicitly identify transactions involving an exchange, but may instead show the name of an affiliated bank or parent company. 

For example, searching past bank statements for customer transactions at Kraken might not yield any records explicitly listing the name of that exchange. Yet an experienced blockchain investigator would know that relevant transactions may appear in bank statements involving affiliated counterparties such as Kraken’s parent company Payward Inc. or its financial partners such as Metropolitan Commercial Bank (MCB).

Hardware Wallet: Hardware wallets from Ledger resemble thumb drives; Trezor wallets look like key fobs; and Tangem has models as slim as a credit card. All of these devices enable owners to self-custody their crypto assets and keep them offline until needed. 

Blockchain Address: Any record of wallet addresses found in personal papers or past communications of an opposing spouse can be highly relevant to asset discovery. An address is a long string of letters and numbers – a unique alphanumeric sequence – that serves as the virtual location to which digital currency is sent and received. Bitcoin addresses begin with 1, 3, bc1 or bc1p. Ethereum addresses begin with 0x. Addresses are used by cryptocurrency exchanges such as Binance and Coinbase to process customer deposits. They are also used by individuals operating their own self-custodial wallets, such as a Ledger hardware wallet, an Onchain mobile wallet, or a MetaMask software wallet. 

Transaction Hash: A transaction hash appears similar to a blockchain address, but references a particular transaction on the blockchain. Entering a hash into a blockchain explorer will reveal the addresses involved on both sides of a transaction – sender and recipient – as well as the asset type, amount, and date/time of the transaction.

Seed Phrases: A seed phrase – also known as a recovery phrase – is a series of 12 to 24 random words that are auto-generated by wallet software when the wallet is first set up.  Seed phrases can be used to recreate the contents of a wallet – and control its assets and addresses – even if the wallet itself has been lost, compromised or destroyed. A spouse who leaves behind a list of a dozen odd words that read like a bad haiku might be hiding something. 

Digital Devices: Mobile phones, tablets and laptops left behind by an opposing spouse who abandons the marital residence can contain valuable data for asset discovery. Devices should be imaged and inspected by a digital forensic analyst. Relevant files include software wallets, browser history, password managers, email archives, tax reports and personal finance applications. Recovery of deleted data is possible under certain circumstances. 

• Email Messages: Exchanges regularly send marketing emails to their customers. Certain cryptocurrency exchanges also send confirmation receipts by email after every buy, sell, trade and transfer is executed. These receipts contain dates, amounts, addresses and hashes. By analyzing multiple transactions, patterns of financial activity may gradually come into focus. Forensically, a composite profile can be built from these discrete pieces of data, like a mosaic laid tile by tile, until the full financial picture is revealed. 

• 2-Factor Authentication Apps: Major cryptocurrency exchanges often recommend or require their customer accounts be protected with two-factor authentication. If an opposing spouse has abandoned an old smartphone or laptop at the marital residence, it should be forensically examined for any evidence of apps like Google Authenticator or Authy that might contain links to exchange accounts. This information will help determine where legal discovery and subpoenas should be directed. 

• Virtual Private Network (VPN): Certain cryptocurrency exchanges established in offshore and foreign jurisdictions do not meet financial regulatory requirements for participation in the U.S. and European markets. Some of these exchanges are well known for their lack of anti-money-laundering (AML) and Know Your Customer (KYC) compliance. This makes them ideal choices for hiding assets and other illicit activity. Users with U.S.-based IP addresses may be automatically excluded from accessing the exchange online; but these security measures can be circumvented using a Virtual Private Network (VPN). The VPN will trick the exchange’s servers into believing the U.S. customer comes from another, non-prohibited country. Any evidence that an opposing spouse routinely uses applications like NordVPN, CyberGhost, ExpressVPN, ProtonVPN or IPVanish might potentially be indicators of foreign exchange activity. 

• Privacy Coins: Privacy coins like Monero, Dash and Zcash are part of a special subset of cryptocurrencies with their own blockchains that have been designed for maximum anonymity. Basic information of each transaction – down to small details like the amount – may be disguised and remain opaque to external inspection. These enhanced privacy features are intended to make it more difficult to forensically investigate and trace assets. Even if it is not technically possible to de-anonymize certain transactions, gathering evidence that an opposing spouse has invested in privacy coins may be useful for establishing a potential pattern of asset concealment. Such evidence may be found in subpoenaed transaction histories from exchanges, or through deep-dive digital forensic examination of a spouse’s devices that includes browser history, command-line wallets and installed applications.

• Tax and accounting tools: Financial software customized for cryptocurrency traders include CoinLedger, Koinly and CoinTracker. These applications often connect directly to exchanges and wallets to automatically sync financial data for the user’s portfolio. They can contain a deep pool of data on trades, transactions and accounts. 

Effective Subpoenas of Cryptocurrency Exchanges for Divorce

Subpoenas can be a powerful tool for effective discovery of digital assets in divorce proceedings. It is important to note that subpoenas of cryptocurrency exchanges have several key differences from similar instruments traditionally served on financial institutions such as banks and brokerage firms. 

Hudson Intelligence has developed proprietary investigative methods for locating accounts at cryptocurrency exchanges. We assist clients in preparing a roadmap of subpoena targets for divorce proceedings and civil litigation. 

Email addresses are often used by cryptocurrency exchanges as a primary customer identifier. An email address can be a more reliable search criteria than the accountholder’s Social Security Number (SSN) or paired name and date of birth (name+DOB) which are common criteria for bank subpoenas. Certain exchanges might not have record of the accountholder’s SSN or DOB, depending on their Know Your Customer (KYC) compliance practices and related policies on retaining personally identifying information (PII).

Accountholders can also be identified by exchanges when associated with a specific customer deposit addresses (identified by a blockchain address) as well as specific outbound transfers executed by the exchange on behalf of its customer (identified by transaction hash). 

Personal Identifiers for Exchange Customers: Potential identifiers for accountholders at cryptocurrency exchanges and virtual asset services providers can include any of the following: 

• Name (Full Legal Name and Known Variations)

• Email Address 

• User Name or Handle

• Customer Deposit Address

• Transaction Hash 

• Account Number

• Cell Phone Number

• Tax Identification Number

• Date of Birth

• Passport Number

• Physical or Mailing Address

Appropriate Scope of Exchange Subpoenas: In general, subpoenas to cryptocurrency exchanges should include a request for all information associated with the subject, including but not limited to:

• Name of accountholder(s) 

• Account registration and use information, such as registered email, phone number, Know Your Customer (KYC) compliance documents, support tickets/correspondence, and any changes/revisions to the aforementioned

• Any and all account statements, including monthly statements, annual year-end statements, and tax reporting statements;

• Historical transaction data, including complete deposit, trade, transfer, and withdrawal records, complete with transaction hashes and wallet addresses

• Linked financial accounts (such as bank accounts, credit cards, other exchange accounts) and historical transaction data, including all deposits and withdrawals of fiat currency and digital assets to/from external accounts

• Source of Funds (SoF) and AML compliance audit reports

• Account-related correspondence (internal or external), including copies of subpoenas, warrants, etc.

• Login history with date/time-stamps, IP addresses and user-agent data

• Any other information pertaining to the identified account(s) that the exchange has in its possession, custody, or control

After customer account records have been produced by a subpoenaed exchange, expert analysis and interpretation of the transaction history may reveal many other relevant findings, in addition to the account’s current status and balance. Such records often contain leads for forensic asset tracing if cryptocurrency and tokens have been transferred from the exchange account to self-custodial wallets or used to acquire Non-Fungible Tokens (NFTs) or staked in interest-bearing decentralized finance (DeFi) applications. Tracing the flow of assets in – and out – of the customer account can also identify patterns of activity involving mixers, gambling sites, darknet markets, decentralized exchanges or fraud schemes. 

Blockchain intelligence experts can provide guidance on identifying exchanges that are most likely to be responsive to subpoenas – and alternative approaches to develop asset-related information if an exchange does not comply with requests for account records or transaction history.

How to Determine Value of Cryptocurrency for Divorce 

Determining the proper value of cryptocurrency investments can be challenging in contested divorce proceedings. The same attributes that make cryptocurrency attractive to its proponents – such as its decentralized nature, technical innovation, price volatility, and perceived anonymity – can be complicating factors for court proceedings.

It is important to have a reliable, credible expert who can provide an accurate valuation of cryptocurrency investments. The appraisal expert should be able to clearly explain their process and methodology for arriving at a specific valuation. Source documents and key evidence should be cited as needed. 

To determine how cryptocurrency assets should be divided, it must first be ascertained whether the assets are marital or separate property. For example, if one spouse acquired several Bitcoin before the marriage, and has strictly followed a cryptocurrency investment strategy commonly known as “Hold on For Dear Life” (HODL) – never selling, swapping or trading – then those pre-existing assets could be considered sole and separate property of the spouse. However, those assets could potentially be converted to marital property if the Bitcoin were transferred to a joint spousal account or sold and subsequently comingled with marital funds. 

Determining the appropriate date on which the cryptocurrency assets should be valuated is another component of these calculations. Certain cryptocurrencies have experienced extreme price swings over the past decade. 

The price of Bitcoin, for example, increased 630% from December 2022 to December 2024, surging in two years from a low of around $16,500 to more than $108,000. Multiple competing valuation scenarios might reasonably exist for Bitcoin owned by a married couple who separated in 2022 but did not have their divorce finalized until 2024. 

In the past five years, Hudson Intelligence has forensically traced more than $250 million in cryptocurrency and digital tokens. Across all asset classes – including cryptocurrency, bank and brokerage accounts – Hudson has located more than $1.2 billion for our clients since 2011. The findings of our forensic investigations and valuation reports are supported with expert testimony in the clearest possible terms.

Consult a Crypto Forensic Expert

Hudson Intelligence assists divorce law firms and divorce litigants with locating and properly valuating cryptocurrency assets. Every cryptocurrency investigation is led by a Cryptocurrency Tracing Certified Examiner (CTCE) and Certified Fraud Examiner (CFE). If you would like to discuss a potential investigation or expert witness engagement, please complete the form below.