How Is Cryptocurrency Divided in Divorce When One Spouse Claims It Was “Lost” in a Hacking Incident?

Divorce is emotionally challenging, and the addition of digital assets can intensify the stress. If marital cryptocurrency has allegedly disappeared due to hacking, it’s natural to feel frustrated, suspicious, or even powerless. 

Many people worry that they’ll never know whether the loss was real or whether assets are being hidden during an already painful separation. You’re not alone in feeling this way, and there are legal paths forward that can help restore clarity and fairness to the process.

At Caleb Bland Law, PLLC, we help clients in Elizabethtown, Kentucky, and the surrounding areas address tough property questions during divorce. 

Cryptocurrency disputes may feel overwhelming, but with the right legal approach, you can protect your interests and pursue a fair outcome. Call today to discuss your situation and learn about available support.

Cryptocurrency as Marital Property in Kentucky

In Kentucky, most assets acquired during a marriage are classified as marital property, regardless of whose name is on them. Cryptocurrency is often included, even though it differs from traditional assets like homes or bank accounts. Digital currency bought, mined, or traded during the marriage may be subject to division.

That said, classification still matters. Some cryptocurrency holdings may be nonmarital, such as assets acquired before marriage or received as gifts or inheritances. The challenge arises when one spouse claims the cryptocurrency no longer exists due to a hacking incident.

Courts don’t simply accept that statement at face value. Instead, they look closely at when the asset was acquired, how it was managed, and what evidence supports the claim of loss.

Kentucky courts aim for an equitable division of marital property. That doesn’t always mean a 50/50 split, but it does mean the division should be fair under the circumstances. When cryptocurrency is involved, fairness depends heavily on transparency and proof.

Claims of “Lost” Cryptocurrency and Why Courts Question Them

Claims of cryptocurrency lost in a hack raise immediate questions. While digital assets are prone to volatility and security risks, they can also be used to conceal value. Courts recognize both possibilities, leading to careful scrutiny of such claims.

Before accepting that cryptocurrency is truly gone, judges may look for details about the alleged incident. Vague statements or missing documentation can undermine credibility. Courts often want to know when the hack occurred, what steps were taken afterward, and whether the loss was reported to any platform or authority.

Common red flags courts may consider include:

• Inconsistent timelines about when the loss occurred

• Lack of transaction records or wallet addresses

• Continued access to related accounts or exchanges

• Transfers to unknown wallets shortly before the divorce filing

Courts don’t assume wrongdoing automatically, but they do expect clear explanations. If the claim doesn’t add up, a judge may treat the cryptocurrency as still existing for property division purposes.

After reviewing these concerns, the court may decide that further investigation is needed before proceeding.

How Cryptocurrency Loss Is Investigated During Divorce

When questions arise about missing cryptocurrency, several tools can be used to uncover the truth. Digital assets leave trails, even when someone believes they’ve been erased. The goal isn’t punishment; it’s accuracy and fairness in dividing marital property.

Ways alleged losses may be examined include:

• Reviewing exchange account statements and login histories

• Examining blockchain transaction records

• Requesting documentation of security breaches or hack reports

• Comparing tax filings that reference digital assets

Each of these steps helps uncover what truly happened. Blockchain records can be especially insightful, as transactions are typically permanent and publicly accessible, even if the wallet owners remain anonymous.

After gathering this information, it can be presented to the court to either support or dispute the claim of loss. This ensures that neither spouse is unfairly affected by incomplete or misleading details.

What Happens If the Court Finds the Cryptocurrency Wasn’t Really Lost

If a judge determines that cryptocurrency wasn’t lost as claimed, the court has options. Kentucky courts have broad discretion to address dishonesty or attempts to hide marital assets. The focus remains on reaching an equitable outcome.

Possible court responses may include:

• Assigning the full value of the cryptocurrency to the spouse who claimed it was lost

• Awarding a larger share of other marital assets to offset the hidden value

• Factoring the conduct into other divorce-related decisions

These remedies aren’t about punishment alone. They’re meant to restore balance when one spouse’s actions have skewed the property division process. Even if the cryptocurrency can’t be recovered directly, its value can still be accounted for in the final settlement or decree.

After these determinations are made, the court can move forward with a clearer understanding of the marital estate as a whole.

Steps You Can Take If Your Spouse Claims a Hacking Incident

Hearing that marital cryptocurrency has supposedly disappeared due to a hacking incident can leave you feeling uncertain, frustrated, and unsure about what to believe. While it’s important to remain calm, it’s equally important not to ignore the claim or assume it can’t be challenged.

Thoughtful, measured action can help protect your financial interests and preserve important evidence. These practical steps may help.

Gather every record you can access

Collect bank statements, exchange account summaries, wallet addresses, screenshots, emails, transaction confirmations, and tax documents that reference cryptocurrency. Even partial or outdated records can help establish ownership, value, and transaction patterns.

Create a timeline of known activity

Write down when the cryptocurrency was purchased, traded, or discussed, along with any statements your spouse made about the alleged hack. Timelines often reveal inconsistencies that may become important later.

Document all communications

Save text messages, emails, or written statements in which your spouse mentions the loss, the hacking event, or related accounts. These communications may later support or contradict their claim.

Avoid emotional confrontations

Direct accusations can increase hostility and may cause a spouse to become less cooperative or more guarded with information. A calm, factual approach preserves stability while legal tools are used to obtain answers.

Don’t attempt to investigate on your own through improper access

Trying to log into your spouse’s private accounts or devices can create legal issues. Formal discovery methods are safer and more effective.

Discuss the issue promptly with a divorce attorney

An experienced divorce attorney familiar with digital asset disputes can determine what information to request, how to frame discovery demands, and when professional forensic assistance may be helpful.

Your attorney may then pursue formal discovery methods such as:

• Requests for exchange account histories and login activity

• Subpoenas to trading platforms

• Requests for documentation of reported hacks or security breaches

• Depositions or written questions requiring sworn explanations

These steps shift the burden from speculation to documented evidence. Even when cryptocurrency truly is lost, clear records help establish when and how the loss occurred, which matters for property division.

Most importantly, remember that you aren’t required to accept a hacking claim at face value. Kentucky divorce courts expect transparency, and you have the right to ask for proof. By staying organized, informed, and supported by legal counsel, you place yourself in a far stronger position to pursue a fair and balanced outcome.

Seek a Compassionate Path Forward With a Divorce Attorney

At Caleb Bland Law, PLLC, we support clients in Elizabethtown, Kentucky, and throughout Radcliff, Shepherdsville, Bardstown, Brandenburg, Leitchfield, Hodgenville, Louisville, Hardin County, Nelson County, LaRue County, Hart County, Meade County, Grayson County, Breckinridge County, Bullitt County, and Jefferson County as they work toward fair resolutions.

If you’re searching for a family law firm that can help you address cryptocurrency concerns with care and diligence, reach out to us today to discuss your next steps.