Crypto Bankruptcy & Exchange Loss Deductions 2026 – FTX, Celsius & More
Thousands of investors lost crypto in FTX, Celsius, BlockFi, and Voyager. The IRS has specific rules for these losses. This guide explains how and when you can claim a tax deduction.
Exchange Bankruptcy: When Can You Claim the Loss?
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- The IRS confirmed FTX victims can claim capital losses
- Loss = your cost basis (what you paid) minus any distributions received
- If you later receive distributions: Report as income up to the previously claimed loss
Types of Crypto Losses and Tax Treatment
| Loss Type | Tax Treatment |
|---|---|
| Exchange bankruptcy (FTX, Celsius) | Capital loss when loss is determined |
| Rug pull / scam token | Capital loss when token becomes worthless |
| Personal theft / hack | Generally NOT deductible 2018–2025 (TCJA) |
| Ponzi scheme | Safe harbor under Rev. Proc. 2009-20 |
| Lost private keys | NOT deductible (you still own the asset) |
Capital Loss Limitations
- Capital losses first offset capital gains
- Net loss: Up to $3,000/year deductible against ordinary income
- Remaining losses carry forward indefinitely
- $100,000 FTX loss with $0 gains = $3,000/year offset for ~33 years
Documentation Required
- Account statements showing your balance before the event
- Proof of the loss (bankruptcy filing, exchange announcement)
- Your cost basis (purchase receipts, exchange records)
- Bankruptcy court distribution statements
Related Resources
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Start for free →Disclaimer: This article is for general informational purposes only and does not constitute tax advice. For individual tax advice, consult a licensed tax professional.