There might be a bright side to those hurt by the FTX story.
after the collapse of his cryptocurrency exchange, which is more than just a moral victory for the exchange’s roughly 1 million individual investors. While not locked in yet, things appear to be on track for these investors to take a more favorable tax position as SBF’s fate continues to unravel.Earlier this fall, it appeared that assets lost in the FTX collapse would be considered a capital loss under the United States tax code for the tax year 2022.
The charges the SEC leveled against SBF focus on equity investors, not retail investors. But the SEC does specifically mention “the undisclosed diversion of FTX customers’ funds to Alameda Research.” While not an official green light for the safe harbor, it’s very close — closer than we may have expected we’d see in 2022.
The IRS may also weigh in on if the existing charges are enough to trigger the safe harbor, and hopefully, 2022 is the year to take it. The theft loss could also be claimed in a future year, but most FTX investors will likely be eager to recoup some of their losses by offsetting income on their taxes as soon as possible.For investors who lost assets on FTX, planning on claiming the capital loss at this point would likely be unwise.
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