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Cryptopia Cryptocurrency Liquidation

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Hi,

With Cryptopia recently goin into liqididation, i was wonding how we are supposed to handle this at tax time.

 

For instance do we write it all off as a capital loss? If that is the case, what happens in the following scenarios:

 

Qn1: I purchased coin ABC for $10 and it was worth $1 at the time of liquidation. Is the loss $10?

Qn2: I purchased a coin DEF for $10 and it was worth $100 at the time of liquidation. Is the capital loss $10 or $100?

 

Or are we supposed to wait (years?) until Cryptopia has gone through the courts, etc.

I presume that we can claim the los now, and if they do come back with a partial refund, then we just claim that as a capital gain?

 

Thanks.

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ATO Certified

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Hi @ATO_qns_12345,

 

Thanks for your patience whilst we checked information regarding your query with a specialist area.

 

They have advised, the loss (once it is available) is only the amount spent to acquire the asset. In each example, the person spent $10, so the loss can’t be any more than that.

 

The loss only arises when the relevant asset is ‘lost or destroyed’ or when it is ‘redeemed or cancelled’ or ‘abandoned, surrendered or forfeited’ (CGT events C1 and C2). It is a question of fact when the one of those things happens.

 

Cryptopia is an exchange. I understand that the liquidators of the exchange are working to recover the cryptocurrency that it held. It is possible that the cryptocurrency will be returned to holders. The relevant assets are the cryptocurrency assets. It is unlikely that any loss arises until such time as the liquidation process has been finalised and it can be determined what investors have actually lost (if anything).

 

Hope this helps, JodieH.

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Enthusiast

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You should use the full market value at the time the loss occured. 

Community Support

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Hi @ATO_qns_12345,

 

Welcome to our Community!

 

We're checking information with a specialist area regarding your query to see if we can provide a response and we'll get back to you as soon as possible.

 

Thanks, JodieH.

Best answer

ATO Certified

Community Support

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Hi @ATO_qns_12345,

 

Thanks for your patience whilst we checked information regarding your query with a specialist area.

 

They have advised, the loss (once it is available) is only the amount spent to acquire the asset. In each example, the person spent $10, so the loss can’t be any more than that.

 

The loss only arises when the relevant asset is ‘lost or destroyed’ or when it is ‘redeemed or cancelled’ or ‘abandoned, surrendered or forfeited’ (CGT events C1 and C2). It is a question of fact when the one of those things happens.

 

Cryptopia is an exchange. I understand that the liquidators of the exchange are working to recover the cryptocurrency that it held. It is possible that the cryptocurrency will be returned to holders. The relevant assets are the cryptocurrency assets. It is unlikely that any loss arises until such time as the liquidation process has been finalised and it can be determined what investors have actually lost (if anything).

 

Hope this helps, JodieH.

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