Losses from Exchange Bankruptcies: FTX, Celsius, and How to Declare Them
The collapse of FTX in November 2022, followed by Celsius, Voyager, and other platforms, left thousands of Spanish investors with blocked or lost funds. The good news is that part of that loss can be reflected in your tax return.
Legal Base
Article 33.3.c of the LIRPF establishes that capital losses derived from overdue and uncollectible credits are considered capital losses. For cryptocurrencies in bankrupt exchanges, the AEAT has recognized that they can be declared as losses when the insolvency proceedings prove the impossibility of recovery.
When can I declare the loss?
The timing of the tax attribution depends on the status of the proceedings:
| Situation | When to declare the loss |
|---|---|
| Exchange in insolvency proceedings | When final insolvency is declared |
| Exchange disappeared without proceedings | When there is reasonable evidence of total loss |
| Expected partial recovery | Only for the presumably unrecoverable part |
For FTX: the bankruptcy proceedings in the US are well advanced. Spanish creditors can declare the loss once the credit is recognized as uncollectible in the proceedings.
Necessary Documentation
For the AEAT to accept the loss, you must prove:
- That you held the assets in the exchange (screenshots of the balance, deposit history).
- That the exchange went bankrupt and the assets are unrecoverable or partially unrecoverable (resolutions from the insolvency proceedings, official communications).
- The FIFO acquisition cost of the lost assets (calculated based on your full history).
Calculation of the Loss
The declarable loss is the FIFO acquisition cost of the assets that you will not be able to recover.
Important: If you recover part of the assets through the insolvency proceedings, that recovery may generate a capital gain in the year it occurs.
What happens with future recoveries
If in 2025 or 2026 you receive a partial distribution from FTX (creditors are expected to receive between 100-118% in dollars), that distribution may generate:
- A capital gain if you receive more than what you declared as a loss.
- A compensation that reduces the declared loss if you receive less.
Scam vs. Bankruptcy
There is an important tax difference:
- Bankruptcy: The exchange operated legally and went bankrupt. Article 33.3.c LIRPF applies.
- Scam or fraud: If the exchange operated fraudulently from the start, the loss may be considered a scam, which has a slightly different treatment, although the practical result is similar.
Conclusion
Losses from exchange bankruptcies are real and declarable. With the correct documentation and in the appropriate tax year, they can offset gains from other years and reduce your tax bill. Do not overlook them.