Crypto and Digital Asset Disclosure
Crypto and Digital Asset Disclosure
If you hold cryptocurrency, NFTs, tokens, stablecoins, or digital rights, disclosure is not just good practice. In many matters it is a legal duty. Whether you are navigating a separation, managing a shareholder dispute, selling a business, or responding to a regulator, the way you identify, value, and disclose digital assets can decide outcomes. This page gives you a practical, high level guide to what must be disclosed, how to prove ownership and value, and what happens if information is missing.
Who this page is for
You are a professional, founder, executive, investor, or high net worth individual with a mix of traditional and digital wealth. Your portfolio might include:
- Bitcoin, Ether, and other tokens held on exchanges and hardware wallets
- Stablecoins parked in DeFi protocols for yield
- NFTs in multiple wallets across chains
- Token allocations from a start-up or DAO
- Wrapped assets, staked positions, LP tokens, and on-chain loans
- Cold storage in safes or with custodians
- Historical positions on exchanges that no longer operate
- Your legal question is simple to ask and hard to answer. What do you have to disclose, how do you prove it, and what are the consequences if something is missed.
What counts as a “crypto” or digital asset
- For disclosure purposes, assume the net widens rather than narrows. You should list:
- Coins and tokens on any chain, including wrapped and bridged versions
- NFTs and semi-fungible tokens
- Staked assets and staking rewards
- Liquidity provider tokens and yield farming positions
- Derivatives and options written on tokens
- IOUs or account balances on centralised exchanges or brokers
- Airdrops you have claimed or are entitled to claim
- Private keys, seed phrases, multisig control, and access credentials
- Interests in companies, funds, or trusts that hold crypto
- Loans you have made or received that are collateralised by digital assets
Think in terms of control and beneficial ownership. If you can move it, direct it, or benefit from it, expect to disclose it.
Why disclosure matters
Disclosure underpins three things: fairness, enforceability, and credibility.
- Fairness. In family law and commercial disputes, the court expects both sides to put their full financial cards on the table.
- Enforceability. Orders and agreements only work if assets are properly identified and can be accessed.
- Credibility. Transparent records reduce disputes about value, ownership, and intent. A party who volunteers clear crypto records tends to be believed on other issues.
Our Family Lawyers
Our lawyers have vast experience in Family Law. Whether your case involves a 50 million dollar business or a suburban house, a relocation with children to Preston or Paris, or a Divorce Application in Melbourne or Mumbai, rest assured that we know how to deal with it in the best possible way and obtain the best possible result for you.
Your duty of disclosure in disputes and settlements
If you are in property settlement negotiations, mediation, or court, expect to disclose digital assets with supporting documents. The duty is ongoing. It starts early and continues until the matter is resolved. Typical expectations include:
- A schedule of all wallets, exchanges, and custodians
- Historical and current balances, with addresses where safe to provide
- CSV exports of transactions from exchanges and wallets
- Screenshots or statements showing staked positions and DeFi exposure
- Records of private sales, OTC trades, and peer-to-peer transfers
- Evidence of cost bases for tax and valuation purposes
- Explanations for transfers to mixers, privacy wallets, or friends
- If providing an address creates a security risk, you can propose alternatives such as a forensic summary, a view-only blockchain explorer link, or disclosure to an independent expert under a confidentiality protocol.
How courts treat crypto in the asset pool
Courts generally treat digital assets as property with a value that can be assessed and divided or taken into account. The focus is practical:
- Identify and include. If you own it or control it, it belongs on the balance sheet.
- Value fairly. Volatility is managed through time-weighted data, expert reports, or valuation windows.
- Allocate risk. The party who wants to keep a volatile asset may also keep the risk of swings between valuation and settlement.
- Trace misconduct. If assets were moved to frustrate a claim, the court can draw adverse inferences, make add-backs, or adjust the division to compensate.
Proving ownership and control
Ownership in crypto is about keys and control. Helpful proof includes:
- Exchange KYC records, account numbers, and device logs
- Blockchain evidence that a wallet you control received funds from your known exchange account
- Multisig policies showing your signing rights
- Custody agreements and evidence of withdrawals or deposits
- Hardware wallet serials and custody logs
- Recovery records for seed phrases, if disclosure can be made safely
- When in doubt, an independent expert can verify control without exposing your seed phrase. For example, you can sign a message from a wallet address for verification.
Tracing, forensics, and data reconciliation
On-chain data is permanent. That helps. Off-chain records like exchange logs and emails provide context. A typical forensic process:
- Inventory. Compile all known wallets, exchanges, custodians, and devices.
- Acquire data. Export complete transaction histories and tax reports.
- Link entities. Match on-chain addresses to your accounts and known counterparties.
- Follow flows. Identify hops through mixers, bridges, and cross-chain swaps.
- Reconcile. Tie movements to bank transfers, invoices, or messages.
- Conclude. Produce a clear timeline and balance sheet.
- If an exchange has collapsed, you still disclose the claim as a receivable and attach whatever proof of claim or balance records you have.
Valuation approaches that work
There is no single correct method. Match the approach to the asset.
- Spot value on a valuation date. Use reputable pricing sources and document them.
- Averaging windows. Smooth volatility with a 7 to 30 day lookback.
- Net position value. Consider collateral, margin loans, staking locks, and vesting schedules.
- Discounts and premiums. Apply discounts for illiquid tokens or locked positions, and premiums for assets with embedded rights like governance or fee shares.
- Derivative pricing. Value options and perpetuals consistently with the underlying market at the valuation time.
- If one party keeps a volatile coin, you can agree to a collar. For example, divide based on the price at settlement, with a cap and floor to manage risk for both sides.
Tax intersections you cannot ignore
Digital asset events often have tax consequences. Common triggers include disposals, swaps between tokens, spending coins on goods or services, and realising staking rewards. During disclosure:
- Record cost bases, acquisition dates, and disposal details
- Separate personal use or de minimis transactions from investment activity where relevant
- Flag any prior tax rulings or private advice you rely on
- Note foreign exchange exposure when assets are priced in USD but taxed in AUD
- Tax positions should be consistent with your disclosure. If you claim a coin is not yours in a dispute but declared gains on it last year, expect tough questions.
Red flags that suggest concealment
If you are worried a counterparty is hiding digital assets, look for:
- Bank transfers to exchanges with no matching disclosure
- High-value stablecoin inflows to known addresses during negotiations
- Sudden adoption of privacy tools, mixers, or coin-join
- Claims of catastrophic loss without evidence of the event
- A pattern of small transfers to new addresses just before a valuation date
- Frequent bridging to chains where the other party assumes you will not look
- If you see these signs, request targeted disclosure, engage a forensic expert, and consider interim orders.
Preservation and information orders
If there is a real risk of dissipation, you can ask the court for:
- Preservation orders. Stop-gap directions that prohibit transfers from identified wallets or exchanges
- Information orders. Compel exchanges, brokers, or custodians to produce records
- Appointment of a receiver. In rare cases, an independent party can be appointed to control assets pending final orders
- Delivery up of devices. Where there is credible evidence that access devices or keys are being withheld
- Courts balance effectiveness with privacy and security. You can propose safeguards such as limiting orders to documented addresses, or using experts as intermediaries.
Consequences of non-disclosure
Non-disclosure is costly. Consequences can include:
- Adverse inferences. The court may assume hidden assets exist and adjust the division.
- Add-backs. Property moved out of the pool can be notionally added back.
- Costs orders. The non-disclosing party pays the other side’s costs.
- Setting aside agreements. If a settlement was reached without full disclosure, it can be unwound.
- Referral risk. Serious dishonesty can lead to professional or regulatory consequences.
- If a mistake is discovered, correct it quickly. Prompt, complete corrections reduce the risk of penalties.
Cross-border and exchange risk
Digital assets move across borders at the speed of a transaction. That creates challenges:
- Jurisdiction. A wallet may be accessible anywhere, but exchanges are subject to their local laws.
- Service. You may need creative methods to serve orders on foreign platforms.
- Insolvency. If a platform fails, you become an unsecured creditor. Disclose the claim and pursue the process, but adjust valuations for recovery risk.
- Sanctions and blacklists. Funds transacted through sanctioned addresses can be frozen or tainted, complicating enforcement.
- Planning matters. If you agree to keep a token position, confirm that you can actually access and move it after settlement.
Cybersecurity and chain of custody
Disclosure should not put you at risk. Build a security plan:
- Never disclose seed phrases or raw private keys
- Use message signing to prove control instead of handing over keys
- Store devices in tamper-evident bags when experts need access
- Create view-only dashboards for agreed addresses
- Maintain an audit trail of who handled what and when
- A simple protocol reduces the chance of accidental loss or misuse during the case.
Practical disclosure checklist
Use this as a starting point and adapt it to your situation.
- Identity and access
- List of exchanges, brokers, and custodians with account IDs
- Two-factor authentication methods and recovery contacts
- Statement about any third party who has signing rights or custody
- On-chain holdings
- Wallet addresses per chain, with labels and purpose
- Inventory of coins, tokens, NFTs, LP tokens, and derivatives
- Staked assets and lockup schedules
- Transactions and history
- CSV exports from all platforms for a reasonable period
- Summaries of large transfers, OTC trades, and private deals
- Records of bridges, swaps, and mixer interactions with explanations
- Valuation support
- Pricing sources and valuation date or window
- Notes on discounts, premiums, and risk factors
- Independent valuation if positions are complex
- Tax and accounting
- Cost base schedules and prior returns for relevant periods
- Reports from crypto tax software, reconciled to on-chain data
- Advice letters or rulings you rely on
- Security and integrity
- Confirmation of cold storage arrangements
- Device inventories with serials and custody logs
- Message signatures for address control where appropriate
Case studies and examples
Case study 1: The missing stablecoins
You suspect your former partner moved profits into stablecoins during negotiations. Bank records show transfers to multiple exchanges. Forensic work links those transfers to wallets that now hold stablecoins across chains. The court orders interim preservation of the identified addresses and requires a full accounting. Final orders add back the stablecoins and allocate more of the traditional assets to you to compensate for the attempted concealment.
Case study 2: Volatility managed by a collar
You want to keep a large position in a volatile token you understand well. Your spouse wants certainty. You agree to a valuation window and a collar. If the token price at completion is within the collar, you keep the asset without adjustment. If it breaks the collar, a payment adjusts the division. This protects your upside while giving your spouse certainty.
Case study 3: Exchange insolvency
Your counterparty held tokens on a failed exchange. They disclose a proof of claim and historical statements. The claim is included as a receivable with a recovery discount. You agree to revisit if distributions exceed expectations. This avoids speculative arguments while keeping the asset on the radar.
Case study 4: Proving control without risk
You are asked to prove you control an address with valuable NFTs. Instead of exposing your seed phrase, you sign a message from that address. An expert verifies the signature and reports to both sides. Control is proven and disclosure proceeds safely.
Case study 5: DeFi positions and hidden leverage
A party discloses coins but omits a loan taken against them. On-chain analysis reveals collateral in a lending protocol and a corresponding debt. The balance sheet is updated to reflect both the asset and the liability. The final division accounts for the real net value and the risk of liquidation before completion.
Strategy tips to protect value and reduce conflict
- Start early. Inventory and export data before accounts change or platforms shut.
- Be consistent. Tax records, exchange logs, and on-chain data should tell the same story.
- Prefer independent verification. Use experts to bridge trust gaps.
- Control volatility. Agree valuation dates, windows, or hedges.
- Document risk. Illiquidity, lockups, or smart contract risks justify discounts or protections.
- Negotiate security. Share only what is needed, in the safest form, with controls.
- Keep it commercial. If a digital asset is hard to divide, trade it for something else you value.
Get in Touch Today
Embarking on a divorce journey doesn’t have to be overwhelming. With Melbourne Family Lawyers by your side, you’ll have the support and expertise you need to move forward with confidence.
Contact us today for a consultation. Let’s discuss how we can help you.
Phone: +613 9670 9677 | Email: [email protected]
Frequently Asked Questions
Do you need to disclose wallets with small balances or NFTs that are “worthless”?
Yes. Disclose first, then agree thresholds for what will actually be valued. Small items can be grouped or ignored by consent, but omission harms credibility.
What if you lost access to an old wallet?
Disclose the wallet, explain the loss, and provide whatever proof exists. Expect questions about timing and attempts to recover access.
Can you refuse to provide addresses for security reasons?
You can raise security concerns and propose alternatives such as expert verification, message signing, or redacted summaries. Courts are receptive to balanced solutions that preserve both transparency and safety.
How do you value NFTs with thin markets?
Use recent sale comps if reliable, then apply discounts for illiquidity and creator risk. If no comps exist, a conservative approach with a review mechanism at settlement is common.
What if your counterparty will not cooperate?
Seek targeted disclosure orders, involve a forensic expert, and consider preservation orders. If non-disclosure persists, ask the court to draw adverse inferences and adjust the division.
Is using a mixer automatic evidence of wrongdoing?
No. There are legitimate privacy reasons. Expect to explain the purpose and show that resulting funds can still be tied to you.
A simple roadmap for you
Make an inventory of every account, wallet, and device.
Export everything. Download CSVs, statements, and tax reports.
Build a clean ledger that reconciles bank flows, exchange logs, and on-chain data.
Choose a valuation method that fits your positions and reduces disputes.
Secure your keys. Use message signing, not key sharing.
Prepare to explain any privacy tools, bridges, or complex DeFi positions.
Agree on a protocol for ongoing updates until the matter resolves.
Document tax impacts and keep your positions consistent across forums.
Negotiate commercially. Trade complex items for certainty where possible.
Escalate only when necessary, using targeted orders that protect both sides.
How we can help
If your situation involves meaningful digital assets, get tailored advice early. We can help you:
- Design a safe disclosure protocol that satisfies legal duties without exposing your security
- Prepare or review forensic reports and valuation models
- Negotiate collars, hedges, and risk-sharing terms for volatile positions
- Pursue targeted disclosure and preservation orders when cooperation fails
- Align your disclosure with your tax position and future plans
Bring your wallet list, exchange names, and any CSVs you have. The sooner we build a coherent picture of your digital footprint, the faster you can move to a fair, commercially sensible outcome.