This Is What Happens When a Crypto Divorce Goes Wrong

Last week, the Financial Times gave advice to someone who was wondering if they could re-negotiate their divorce — now that “crypto winter” has caused one party to lose more than half of their assets.

“When we negotiated last autumn, the crypto market was riding high and I was convinced it would go higher still, but following the recent crash my digital assets have more than halved in value. I’m now considerably worse off than my ex and worried about my financial future,” the advice-seeker wrote.

After choosing to keep the crypto, divorcee wants a do-over

August 18, 2022https://t.co/BB8ISngeAH pic.twitter.com/EunSJcdhIS

— web3 is going just great (@web3isgreat) August 20, 2022

The advice seeker said that when the divorce was worked out last year, the ex-wife got “the lion’s share of my pension and other investments,” and the letter writer got the crypto.

The person asked if they could go to court to change the way the assets were split up in the divorce. Crypto has lost about $2 trillion in value since its 2021 high, per CNBC.

In this case, FT’s team had some other advice — don’t pile yourself up with the crypto.

“Generally, one spouse should not carry all the risk-laden assets, while the other holds those whose value is much less immediately susceptible to market forces (like a family home),” the FT wrote.

The outlet added a court was unlikely to reopen the case. If it did every time an asset changed in value, “then the courts would face a deluge of cases looking to reopen agreed settlements,” it wrote.

The issue has begun to come up in divorces in the U.S., too, according to news articles and legal blogs.

“A cryptocurrency wallet, then, is no different than a bank account, retirement fund, or traditional investment account with stock and bond securities when it comes to New Jersey property division,” according to a blog from Lawrence Law, a divorce law firm.

You could split up those assets like you would any others, but with a few complications: It’s a more volatile asset, and there could be a risk of unpaid taxes or taxes being more easily hidden if the other partner doesn’t know as much about crypto. Divorce lawyers could “negotiate an agreement that the value of the crypto assets can be reevaluated before the asset division is final,” the blog added.