The world of cryptocurrency offers many potential financial rewards. Perhaps the most obvious is the appreciation of tokens, and this is how most crypto investors make their money. However, users may also “stake” their tokens in order to receive rewards that are roughly equivalent to fixed income. Although the actual mechanics are completely different, the end result is something akin to a dividend-paying stock. These rewards recently became a contentious issue during the divorce of a major cryptocurrency founder.
What is “Staking” in the Cryptocurrency World?
First, it makes sense to cover the basics of staking in the world of cryptocurrency. In basic terms, this is a system of rewarding users for providing liquidity. For many blockchain enthusiasts, the goal is to “hold on for dear life” or “HODL.” This can be particularly challenging given the extreme volatility of some tokens, and the people behind these tokens reward this mindset with financial incentives.
In exchange for “locking up” their tokens, users receive rewards. These rewards take the form of more tokens – and this “interest rate” can vary depending on the specific token. Those who agree to stake their tokens also participate in the underlying network via a “Proof of Stake” mechanism. This can help verify crypto transactions.
One can read entire articles on the specific details of staking. What divorce attorneys need to know is that this is becoming more popular, particularly among long-term crypto investors. Those who purchased certain tokens early may have holdings worth millions of dollars. Even if the interest rate is around 5%, staking can provide considerable income throughout the year on these investments.
Solana Founder Accused of Concealing Staking Rewards During Divorce
From a divorce perspective, staking can be problematic – and it may be relatively easy to conceal this form of income. In December of 2024, various sources reported that a Solana co-founder had been accused of concealing his staking rewards during his divorce.
His ex-wife has filed a lawsuit in California, accusing her ex-husband of concealing millions of dollars in staking rewards. As part of the divorce settlement, the co-founder agreed to transfer “control” of half of his SOL tokens. The total value of these tokens is somewhere around the $90 million range (as of this writing).
However, the ex-wife says that he neglected to provide her with the staking rewards associated with these tokens. She also claims that after asking for her share of the rewards, her ex-husband essentially laughed in her face and told her “good luck.”
All income earned during marriage is usually divisible during divorce – including interest. As long as the underlying asset is marital property, this would include staking rewards. But like so many aspects of the blockchain, it may be difficult to determine what is actually happening beneath layers upon layers of anonymous transactions.
This could be a notable challenge for divorce attorneys in the next few years, especially given the rising popularity of cryptocurrency as a method of concealing assets.
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