Cryptocurrency in Divorce: Three Misconceptions That Keep Coming Up

Around 12% of UK adults now hold cryptocurrency, according to the Financial Conduct Authority. As those portfolios enter divorce proceedings, so do some persistent misunderstandings about what forensic investigation can and cannot achieve.

The misconceptions below are not obscure. They come up in high-net-worth cases and in modest ones. They are held by parties who use cryptocurrency daily and by those who acquired a little Bitcoin years ago and have barely thought about it since. What they share is a common assumption: that cryptocurrency occupies a different legal and practical universe from other assets. It does not.

Misconception 1: “The Blockchain Is Anonymous”

This is probably the most widespread belief, and it comes from a real technical fact that is slightly misunderstood. The blockchain is pseudonymous, not anonymous. The distinction matters enormously in practice.

Every transaction on Bitcoin, Ethereum, and most other major public blockchains is recorded permanently and publicly. The record cannot be altered, deleted, or hidden. What the blockchain does not do is attach a name to a wallet address by default. But that one layer of separation is far thinner than people assume.

To get money into the crypto system, most people use a regulated exchange. Coinbase, Binance, Kraken and their equivalents all operate under Anti-Money Laundering regulations and Know Your Customer requirements. They verify identity. Bank transfers to fund an exchange account are recorded on both sides. The moment money moves between a named bank account and a crypto exchange, the pseudonymity of that wallet is broken.

From that point, forensic blockchain analysis can follow the funds outward. Wallet addresses that receive funds from a known, verified account are linked to that account in the investigative record. Transfers between wallets are visible on the public ledger even where no bank transaction is involved. Physical access to a device is not needed. The wallet address alone is enough to begin.

Misconception 2: “Privacy Coins Make Tracing Impossible”

Privacy coins, Monero being the most common example, are deliberately engineered to obscure transactions. Unlike Bitcoin, Monero does not expose balances or histories on a public ledger. This is a genuine technical difference and it does add complexity to an investigation.

The vulnerability is not in the coin itself but in what surrounds it. To acquire Monero, a person converts conventional currency or a more traceable asset into it, usually through a regulated service. To use the wealth held in it, that wealth has to re-enter the conventional financial system at some point. Both the entry and the exit are documented. A forensic investigation cannot see inside the privacy layer, but it can establish where funds went in, approximately what value entered, and where they emerged. Courts have shown they are prepared to draw adverse inferences when a credible explanation for that gap is not provided.

Misconception 3: “Courts Do Not Understand Cryptocurrency”

This one may have had some basis in 2018 or 2019. It does not reflect where things stand in 2026.

The Property (Digital Assets etc.) Act 2025, which received Royal Assent on 2 December 2025, formally recognised cryptocurrency as a distinct third category of personal property under English law — sitting alongside things in possession and things in action, but distinct from both. This gave statutory footing to what the courts had been developing for years. The High Court had confirmed in December 2019 — in a Commercial Court case involving a ransomware Bitcoin payment, AA v Persons Unknown [2019] EWHC 3556 (Comm) — that Bitcoin could be recognised as property under English law for the purposes of a proprietary injunction. That analysis was subsequently applied in family proceedings, and the Property Act 2025 has now settled the position legislatively.

Where a party’s non-disclosure is established, the consequences include adverse inference orders that value undisclosed assets at their maximum plausible figure; costs orders that, as Culligan v Culligan [2025] EWFC 1 demonstrated, can run to hundreds of thousands of pounds; applications to set aside a financial order years after it was sealed; and contempt proceedings where a specific court order has been breached. None of these require a judge to understand how a blockchain works. They require evidence that assets existed, were not disclosed, and have a value.

That evidence is what a properly prepared forensic expert report provides.

Read more in our series of guides on cryptocurrency and divorce:

• Practical challenges with cryptocurrency as a divorce settlement
• Crypto as a divorce settlement
• Can crypto be hidden

If you are going through a divorce and need expert support, get in touch with us at Wealth Recovery Solicitors for a free consultation. Our friendly and experienced team can evaluate your case, to craft a recovery plan for you and work to recover your funds.

Frequently Asked Questions

Can cryptocurrency be traced in a divorce?

Yes. Most major blockchains are public and permanent. Forensic analysis can follow funds from regulated exchanges through wallet-to-wallet transfers, even without physical access to any device.

Is Bitcoin anonymous?

No. Bitcoin is pseudonymous. Wallet addresses are not labelled with names by default, but once a wallet is linked to a verified exchange account or bank transfer, the pseudonymity is broken.

Do privacy coins like Monero prevent forensic tracing?

Not entirely. While Monero obscures on-chain detail, the entry and exit points remain documented. Courts can draw adverse inferences where the gap between those points is unexplained.

Do English courts have jurisdiction over cryptocurrency in divorce?

Yes. The Property (Digital Assets etc.) Act 2025 confirms cryptocurrency as personal property. Courts treat it like any other asset in financial remedy proceedings.