The four most common crypto loss scenarios are:
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​1. Lost Crypto
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You might have lost your tokens by sending them to the wrong wallet address or lost keys/access to your wallets. Such kinds of losses are usually referred to as casualty losses. A casualty is the damage, destruction, or loss of property resulting from an identifiable event that is sudden, unexpected, or unusual. Up until 2017 casualty losses were deductible. Later the rule was changed, and now from 2018 to 2025 casualty losses are deductible only if the losses are attributable to a federally declared disaster. Crypto losses are not tax deductible.
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​2. Stolen Crypto
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Cryptocurrencies are digital assets making them prone to theft. It includes loss of the coins due to wallet or exchange hacks, malware attacks compromising the access of funds, and stolen hardware that stores the funds. You cannot deduct losses due to crypto theft on your tax return.
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​3. Rug Pull Scams/ ICO Fraud
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Like lost or stolen crypto, these losses are not tax deductible. It is still important to keep good records of the loss of your coins for tax purposes. You can manually mark your token as seen in the video below, or if you need to add the transaction for the lost token you can do so by adding it as a Manual Transaction.
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​4. Worthless Token
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If the tokens that you have become virtually worthless and you wanted to get rid of that coin forever then you can create a manual send transaction with an amount of 0.000000000001 USD. This event will be registered as an Outgoing transaction with capital losses. This might trigger other complications, so we recommend you to do this under the jurisdiction of a tax professional at your own risk.