Capital Loss due to Online Crypto scam

dbmas0n29
dbmas0n29 Member Posts: 1 Newcomer
in General

HI,

I was recently involved in an online Crypto Scam, where I was led to believe by joining this group doing crypto trading, I could make lots of profit. I invested a lot of my own capital, and turned out to be a scam, where they never let me withdrawl any of my capital. I invested over 27K of my own capital which they scammed. Will I be elelible to claim as Capital loss for next years taxes?

thanks,

David

Answers

  • rachels
    rachels FreeTaxUSA Agent Posts: 128 image
    edited September 2025

    Hi dbmason29,

    Yes, if you invested in a cryptocurrency scam, you will typically claim the loss as a capital loss. There is another similar question in the FreeTaxUSA Community. Please refer to the answer given here, which includes specific instructions for entering it in your account:

    https://community.freetaxusa.com/discussion/comment/3822#Comment_3822
  • melissagregoired
    melissagregoired Member Posts: 3 Newcomer
    edited March 3

    Hi David,

    Sorry this happened to you. It is usually not treated as a capital loss because you did not sell the crypto at a loss. Under rules from the Internal Revenue Service, scam losses where you invested for profit may qualify instead as a theft loss from a transaction entered into for profit, which is handled differently and often reported on Form 4684. Reports to the Federal Bureau of Investigation can help support your claim, and a tax professional is recommended because crypto rules are complex.

  • MatthewD
    MatthewD FreeTaxUSA Admin, FreeTaxUSA Agent Posts: 901 image

    See this article in the community.

    https://community.freetaxusa.com/kb/articles/299-how-do-i-report-a-loss-from-a-cryptocurrency-scam?

Categories