New York housewife discovers husband stashed $500,000 in Bitcoin in divorce battle

Cryptocurrency is gaining popularity as a method of hiding assets during a contentious divorce, according to a new report, leading to an evolving cat-and-mouse game with forensic investigators.

In one case, a suspicious New York housewife seeking a divorce tracked down 12 bitcoins, then worth about $500,000, in a secret crypto wallet maintained by her estranged husband. CNBC reported Saturday.

The woman became suspicious because her husband, who made about $3 million a year, was not disclosing much of his assets in the divorce case, prompting her to call in a forensic accountant.

“I know about bitcoin and things like that. I just didn’t know much about it,” said the woman, who declined to be named for fear of retaliation.

“It was never a thought in my head because it’s not like we discussed it together or made investments. … It was definitely a shock.’

Bitcoin, now trading around $27,000, is up about 64% from the start of the year

While asset concealment is nothing new to those looking to avoid a court ruling, the rise of cryptocurrency has created new challenges for divorce lawyers.

“I really still think the law is trying to catch up with this new form of currency, even though it’s been around for a while,” Kim Nutter, a family law attorney based in Florida, told CNBC.

As crypto financial tricks have evolved, so have the tools of those tasked with tracking down marital assets.

Some forensic accountants now specialize in cryptocurrency tracking, using advanced analysis of blockchain transactions to uncover hidden assets.

Sneaky spouses have also developed new tactics, including the use of anonymized digital currency such as Monero, which is said to be nearly impossible to trace.

Cold storage wallets are another favorite trick, where a cryptocurrency password is stored on a physical device such as a USB stick, which is easily portable and cannot be accessed online.

However, so-called ‘financial infidelity’ is not limited to divorcing couples.

A February survey by financial information site Bankrate found that 39 percent of Americans have committed some form of “financial infidelity” against their romantic partner.

While asset concealment is nothing new to those looking to avoid a court ruling, the rise of cryptocurrency has created new problems for divorce lawyers

Of those who are married, in a civil partnership or living with their other half, 12 percent have a secret credit card, Bankrate found.

Meanwhile, 11 percent make large expenses that their partners don’t know about, 10 percent have hidden debts, and 9 percent have a secret savings account.

An interesting observation from the study is that younger generations seem to keep the biggest financial secrets.

Among Generation Z, a whopping 63 percent hid money details from their current partners, along with 54 percent of Millennials — both numbers are much higher than Gen X or Baby Boomers.

“There used to be an expectation that couples would completely reconcile their financial lives, but I’m seeing that’s really changing with younger clients,” Amanda Clayman, a financial therapist in LA, told Reuters after the study.

‘Many young people do not necessarily have that level of integration. Maybe they don’t even see these things as secrets.’