Can My Spouse Hide Money In Cryptocurrency During An Ontario Divorce?
When sorting through the facts and details or an Ontario divorce case, it is no longer surprising to hear that our client suspects their spouse to have money in cryptocurrency that they have not disclosed. Cryptocurrency sits in digital wallets and exchange accounts, outside of a traditional chequing account where money flow can be tracked via an accessible bank statement. Digital wealth raises a new element in family court, but whatever a client’s spouse has moved into cryptocurrency is not simply gone from the marriage.
Using the Ontario court decision of Kostrinsky v. Nasri, 2022 ONSC 2926, we can explain why that fear is often misplaced in terms of how hidden cryptocurrency is traced, how Ontario courts perceive it, and how a judgment can be affected by a spouse who attempts to conceal it.
The Quick Answer
No, a spouse cannot lawfully hide cryptocurrency in an Ontario divorce. Some questions have simpler answers, but in this scenario, there is a straightforward one. Cryptocurrency, like Bitcoin, Etherium, Ripple, Dogecoin, etc, must be disclosed as property. Ontario courts have traced undisclosed cryptocurrency through ordinary credit card transactions as well as banking records, ensuring that it remains included in its full value as part of the net family property equalization.
The Case
The Background
The parties in Kostrinsky v. Nasri married in February 2013 and had two children. They agreed, on a without-prejudice basis, to use July 8, 2019 as their date of separation.
The matter went to trial before Justice O’Brien at the Ontario Superior Court of Justice. The trial dealt with several serious issues; it was not an isolated case involving cryptocurrency, as it also included issues of parenting and allegations of family violence. For our purposes, the dispute concerning property reflects how hidden digital assets could get resolved inside an ordinary, contested family trial.
What Brought the Cryptocurrency Issue to Court
The applicant wife alleged that the respondent husband held Bitcoin he had not disclosed. She further alleged that some of the Bitcoin had been purchased using funds from her own credit card without her consent. In this case, the judge viewed it as a more traditional example of financial non-disclosure family court; the money happened to be quietly converted into a digital asset held in his name.
The Court's Decision
The court ruled in the wife's favour regarding the cryptocurrency dispute detailed at paragraph [163], delivering two legal findings:
Resulting Trust Established: Bitcoin purchased using the wife's funds without her consent was held in a resulting trust. She retained the beneficial interest, regardless of the husband's control over the asset.
No Reward for Concealment: The full value of the husband's undisclosed Bitcoin was successfully traced and included in his net family property for equalization.
Higher Valuation Accepted: Rather than using the asset's value on the date of valuation, which was recorded as $2,989.35, the court accepted the higher valuation at time time of trial where the Bitcoin was valued at $10,482.72.
The Court’s Reasoning
Cryptocurrency still leaves a paper trail. The Bitcoin that was purchased could have been traced back to credit card and banking records, which still remains an “on-ramp” that crypto buyers typically use to convert fiat into digital currencies. Where direct records of the cryptocurrency’s value were incomplete, the court was prepared to accept alternative methods of calculating its current value. Thus, a spouse cannot undercut fair equalization with poor asset recordkeeping or concealment.
The Law Explained
Net Family Property and Equalization
Under s. 4 of the Family Law Act, R.S.O. 1990, c. F.3, "property" is defined broadly and each spouse's net family property is calculated as of the valuation date. Under s. 5(1), the spouse with the lower net family property is entitled to half the difference. Cryptocurrency acquired during the marriage falls within that calculation like any other asset.
The Duty of Financial Disclosure
Rule 13 of the Family Law Rules, O. Reg. 114/99, requires each spouse to make full financial disclosure, sworn in a Form 13.1 Financial Statement in property cases. That obligation covers all assets owned or controlled by a spouse. Non-disclosure is a breach taken seriously by the courts, which could then draw inferences against that spouse.
Resulting Trust
A resulting trust family law principle can arise when one person's money is used to acquire an asset held in another person's name without a genuine intention to gift it. Kostrinsky applied this doctrine directly to Bitcoin: cryptocurrency bought with a spouse's funds, without consent, belonged beneficially to the spouse whose money paid for it.
Hidden Cryptocurrency and Support
Concealed digital wealth distorts how property is divided in a divorce or separation. Cryptocurrency holdings, trading gains, and income form part of the financial picture used to calculate spousal support and child support. A spouse who understates their finances risks having the court determine support on a fuller, less favourable picture once the assets are brought to light.
What You Should Do If You Suspect Hidden Cryptocurrency
Do not confront your spouse or tip your hand as cryptocurrency can be moved quickly. Speak to a lawyer first about preserving the evidence and, where necessary, the asset itself.
Gather the financial records you can lawfully access, such as joint bank statements, credit card statements, and tax returns are where crypto purchases surface. In Kostrinsky, credit card and banking records were exactly how the Bitcoin was traced.
Watch for any signs, which could include transfers to crypto exchanges, unexplained withdrawals, exchange emails, wallet apps, or hardware devices around the home.
Demand full disclosure through the proper channels. Your lawyer can require a sworn Form 13.1 Financial Statement and pursue further disclosure of exchange accounts and wallet records if the first answers are incomplete.
In larger or more complex cases, forensic accounting professionals can trace transfers from bank accounts into exchanges and estimate values where records are missing.
Do not sign a Bitcoin divorce settlement while disclosure is outstanding.
Final Words by Michael Iyore Law
We tell clients the same thing whenever hidden crypto comes up: the technology is new, but the law is not. Ontario treats cryptocurrency as property, the duty of disclosure applies to it in full, and Kostrinsky v. Nasri shows that a spouse who hides Bitcoin ends up with it counted against them anyway.
If you are separating and believe your spouse holds undisclosed digital assets, or if you hold crypto yourself and want to disclose and value it properly, our team at Michael Iyore Law can help you protect your position from the start. Contact us to schedule a consultation.
Disclaimer: This article provides general information only and does not replace personalized legal advice. For help with your specific situation, speak to a licensed family law lawyer.
