Lost, stolen, and worthless crypto
Not all losses are treated equally. A capital loss from selling at a loss is straightforward and useful — but lost, stolen, and scam losses face strict, country-specific rules, and in many cases aren't deductible at all. This guide explains the difference and how CryptaTax helps.
General information, not tax advice. Loss and theft rules — especially for theft and scams — are complex, restricted, and change. This is an area to get professional advice and verify against your country's guidance.
Capital losses (the useful kind)
When you sell or swap crypto for less than you paid, you realise a capital loss. These are generally deductible and valuable:
- They offset capital gains, reducing your tax.
- In the US, net losses also offset up to $3,000 of ordinary income a year, with the rest carried forward indefinitely.
- Most other countries let you carry losses forward against future gains (the UK, for example, if you report them).
Tax-loss harvesting — deliberately realising losses before year-end to offset gains — is a common, legitimate strategy. US → · UK →
Lost, stolen, and scam losses (the hard kind)
This is where it gets restrictive, and the rules differ sharply by country. A key principle everywhere: you can only claim a loss you've actually realised — an asset simply falling in value isn't a loss until you sell or it becomes genuinely worthless.
In the United States specifically:
- Personal theft and casualty losses are not deductible (a suspension that's now permanent, outside federally or state-declared disasters) — so most ordinary scams where you sent funds aren't deductible.
- Investment / profit-motive theft losses can still be deductible under the tax code, limited to your cost basis (not unrealised gains), with documentation.
- Worthless or abandoned crypto (dead tokens, rug pulls, permanently lost access) can generally be claimed as a capital loss once it's truly worthless and unrecoverable.
- Exchange bankruptcies (failed platforms) are typically treated as capital losses, reported when the claim is resolved.
Other countries handle this differently — the UK, for example, allows a "negligible value" claim to crystallise a loss on assets that have become worthless, and lost private keys may qualify only in limited cases. UK crypto tax →
Because the line between deductible and non-deductible is narrow and evidence-heavy, get professional advice before claiming a theft or loss deduction.
How CryptaTax helps
- Calculates your capital gains and losses, so you can see and harvest losses
- Lets you mark assets as lost, stolen, or worthless and computes the loss and remaining basis
- Keeps the records and trail you'll need to support any claim
Whether a lost or stolen loss is ultimately deductible depends on your country and the facts — so pair CryptaTax's records with professional advice.
Capital gains report → · Import your exchanges & wallets →
FAQ
Sometimes, but the rules are strict and vary by country. In the US, personal theft/scam losses generally are not deductible, while profit-motive investment theft may be, and genuinely worthless crypto can often be claimed as a capital loss. Get advice.
Selling or swapping at a loss realises a capital loss that offsets your gains. In the US it also offsets up to $3,000 of ordinary income a year, with the rest carried forward; most countries allow loss carry-forward.
Deliberately selling losing positions before year-end to realise losses that offset your gains, a common, legitimate way to reduce tax.
Not until you realise it. A drop in price is not a loss until you sell, or the asset becomes genuinely worthless.
That is typically treated as a capital loss, claimed when the bankruptcy or claim is resolved, different from a theft loss.