The loss on crypto held at a platform that failed (FTX, Celsius, Voyager, BlockFi). Your asset becomes a claim against the estate; the loss is generally recognized when the claim is settled, sold, or determined worthless, not when the platform froze.
Timing is the whole question. A loss claimed in the year of the freeze may be premature if a distribution follows; a distribution received after a loss was claimed is income. What was reported in the freeze years dictates how the recovery is taxed.
When the claim is resolved: sold, paid out, or formally worthless. Claiming it the year the platform froze is usually too early and creates a mismatch when distributions arrive.
Source: IRC 165; bankruptcy estate distribution notices
Last reviewed September 17, 2026. Tax rules change; confirm current law before acting.
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