Taxes and Issues with Crypto Exchanges

Many people cannot login to their accounts despite having gone through verification and contacting customer support. For example at Coinbase there are many people who just go through a known ongoing verification loop. Check with your accountant, but it seems to many experts that it would be reasonable to consider this as a capital loss for tax purposes.

This would be a reduction in your taxable income.

There is Federal law and State law and there are probably limits, the limits can probably be carried forward. The point is that if your money is in the account, but the exchange is not letting you access it then there is a reasonable argument that the exchange has liquidity issues since this has happened before. It would make sense that the tax treatment would be the same.

TL;DR If your access to your account has been blocked, you have followed proper protocol and you are being given the runaround, don't assume that it's stolen. Ask your accountant and find out about taking a tax loss because this makes sense. Caveat, if you ever do get your money back then that might be a tax gain. You may want to send the exchange an email and a letter telling them the time and date of when you would have cashed out and in what amount. Again check with your accountant.

The question is, what was the tax treatment for people who lost money in failed exchanges?