Celsius Network Taxes US 2026 – Bankruptcy Losses & Earn Income

Celsius Network filed for bankruptcy in July 2022, freezing billions in customer funds. Here is how to handle both the Celsius Earn income you may have reported – and the losses from the bankruptcy.

The Celsius Timeline

• Pre-2022: Celsius Earn paid interest rates of 5–18% APY on deposited crypto
• June 2022: Celsius freezes all withdrawals
• July 2022: Celsius files Chapter 11 bankruptcy
• 2023–2024: Bankruptcy restructuring; customers receive partial recovery in new tokens and cash

Celsius Earn Interest – Already Taxable

If you earned interest through Celsius Earn before the freeze, that interest was taxable as ordinary income in the year received. If Celsius issued you a 1099-MISC, the IRS already has that information. You cannot "unReport" income you already paid tax on.

The Double Taxation Problem

Many Celsius users face a painful situation: they paid income tax on Celsius Earn rewards in 2020–2022, then lost that crypto in the bankruptcy. The solution: claim the bankruptcy loss as a capital loss in the appropriate tax year – separate from the income already paid.

Calculating Your Celsius Loss

Loss = Total cost basis of crypto deposited on Celsius − Total recovery received

Recovery may include: distribution of Celsius tokens (CEL), new company equity, cash distributions from the bankruptcy estate.

Timing: When to Claim the Loss

Claim the loss when it is fixed and determinable. For most Celsius customers, this is the tax year when the final bankruptcy distribution was received and the shortfall became known. Consult a tax professional for the optimal year.

CEL Token Losses

If you held CEL tokens (Celsius's native token) that crashed, these are straightforward capital losses once you sell or the token becomes worthless. CEL has essentially no market value as of 2025.

Disclaimer: This article is for general informational purposes only and does not constitute tax advice. For individual tax advice, consult a licensed tax professional.