Algorithmic stablecoins and crypto crashes: loss statement

The collapse of Terra/Luna (LUNA/UST) in May 2022 was one of the biggest disasters in the crypto ecosystem. Millions of investors lost their savings. But fiscally, many do not know how to report these losses or even if they can do so.

The collapse of UST/LUNA: the most paradigmatic case

In May 2022, TerraUSD (UST, Terra's algorithmic stablecoin) lost its peg to the dollar and entered a death spiral. The LUNA token, which backed UST, also crashed. Millions of tokens that were worth dollars became worth fractions of a cent.

For investors: Losses were 99%+ in a matter of days.

Can I declare LUNA/UST losses?

Yes, but only if there is transmission.

This is the key to Spanish tax law: capital losses can only be declared with the transfer of the asset. If you simply have LUNA that's worth almost 0 but you didn't sell it, you can't report the loss (yet).

Options to "materialize" the loss:

1. Sell on an exchange: If LUNA (now LUNC) is still trading (even at €0.0000001), you can sell to realize the loss. The sale price can be practically 0.
2. Swap for another token: Any exchange is a transmission. Swap LUNA for 1 cent in gases → transmission at that price.
3. Burn tokens: Send tokens to a burner address (0x000...dead). The AEAT does not have clear criteria if this is transmission. Some advisors argue that it is, so it is an option to explore with an advisor.

FTX: losses due to exchange bankruptcy

When FTX went bankrupt in November 2022, thousands of Spanish users were trapped in crypto.

The special situation of bankruptcies:

• The assets in FTX were not in your wallet, but in the custody of the exchange.
• There is no formal transmission → can you declare the loss?

Applicable criteria (pending firm jurisprudence):

• If insolvency is declared and there is no real prospect of recovering the funds: some advisors argue that there is a deductible "property loss" in the year of recognition of insolvency.
• If there is a bankruptcy process and there are prospects of recovering a part: the loss materializes when the bankruptcy process is closed (or when the part that is recovered is collected and the definitive loss can be calculated).
• Documentation required: Emails from FTX/bankruptcy administrator, account statement at closing, balance screenshots, correspondence with the administrator.

Celcius, BlockFi, Voyager: crypto loans on bankrupt platforms

Many "crypto savings" platforms (Celsius, BlockFi) also went bankrupt in 2022:

• Users had deposited crypto to earn interest.
• When they went bankrupt, they could not withdraw their funds.
• In some cases they have partially recovered (Celsius, via the bankruptcy creditors).

Tax treatment:

• Interest already collected: They were declared as income from capital when collected.
• Trapped principal: Asset loss when the bankruptcy is closed and the final recovery amount is known.
• If you recover Bitcoin at a price below cost: profit/loss according to difference.

Essential documentation for collapses and bankruptcies

1. Account statements on the exchange before the collapse/bankruptcy.
2. Screenshots showing the balance on the date of the event.
3. Emails from the exchange announcing the cessation of operations, bankruptcy process.
4. Documents from the bankruptcy process (if any).
5. Records of any distributions received from the bankruptcy.

Losses due to scams, phishing and hacking

If your wallet was hacked or you were the victim of a scam:

• Technically the asset could continue to exist in another wallet.
• The AEAT still does not have a clear criterion on whether these losses are deductible.
• Conservative position: Do not declare until you have firm criteria or a judicial resolution.
• Documentation: Any police report, fraudulent email, on-chain transaction of the hack.

Summary: When you can report each type of loss

Updated: April 2026 | Fiscal year: 2025