If scammers stole your crypto, you still need to report it. The IRS doesn’t forgive losses just because funds are gone. You have to prove it clearly.
CNC Intelligence helps trace stolen crypto. They follow the funds on the blockchain and build reports that tax professionals can use. These reports give your CPA the proof the IRS wants. Without that, your claim might be denied, and you could still owe tax on money you don’t have.
Working with crypto tracing experts ensures losses are properly documented. Their reports help crypto tax professionals file correctly and reduce the risk of audit or penalties
You still need to report crypto lost to scams.
The IRS requires detailed documentation, not just transaction IDs.
CNC Intelligence traces stolen funds and prepares loss reports.
Their evidence allows tax professionals to file correctly and defend your case.
Losing crypto to a scam doesn’t erase your tax obligations. The IRS still requires you to report every transaction—even if the funds are gone.
Most accountants aren’t equipped for this. They can’t trace stolen coins, verify wallet activity, or provide the forensic evidence the IRS demands. Without that proof, your loss claim may be denied, and the IRS could still treat the missing funds as taxable income.
CNC Intelligence fills this gap. They investigate crypto scams, trace stolen assets across blockchains, and create detailed reports showing exactly where your funds went and why they can’t be recovered. These reports give crypto tax professionals the documentation they need to file correctly and defend your case if audited.
Their work focuses on:
Blockchain asset tracing
Cryptocurrency scam investigations
Forensic documentation for tax reporting
Compliance support for crypto tax preparers
When CNC Intelligence works alongside a crypto tax professional, you get both sides covered: proof that your funds are gone and accurate tax filings that meet IRS standards.
When your crypto is stolen or lost in a scam, reporting it can get messy. The IRS needs solid proof of what happened, and that’s not always easy to provide.
Most exchanges only give partial records. Decentralized exchanges give you none. Wallets don’t calculate cost basis for you. If you move assets around or trade frequently, tracking every taxable event becomes difficult.
If funds disappear from your wallet, you have to show they’re unrecoverable. If you bought tokens that turned out worthless, you need evidence of that. The IRS won’t accept assumptions—you must have documentation, reports, or forensic evidence.
The IRS now uses blockchain tracing tools and new reporting rules, including Form 1099‑DA, starting in 2026. Incomplete or inaccurate filings increase your audit risk and can cause the IRS to reject your claims.
This is where CNC Intelligence plays a key role. Their team traces stolen assets, verifies wallet activity, and compiles forensic documentation that helps crypto tax professionals report your transactions accurately and defend your filings.
Most CPAs don’t handle crypto scams often. That creates problems like:
They can’t trace wallet or blockchain activity.
CNC Intelligence tracks stolen crypto across blockchains using forensic software and certified investigators.
They don’t know how to confirm scam-related losses.
CNC provides formal documentation proving your funds are gone and unrecoverable.
They may misreport cost basis or incorrectly classify stolen crypto.
CNC’s reports give your tax professional accurate data on transactions and valuations.
They often fail to meet IRS proof standards.
CNC compiles evidence—including transaction logs and law enforcement reports—that the IRS accepts.
The IRS requires detailed evidence—transaction IDs, law enforcement reports, and professional tracing records. Without this, your deduction can be denied. A standard accountant usually can’t provide that level of documentation.
CNC Intelligence focuses on tracing stolen crypto, gathering forensic evidence, and supporting asset recovery. Their team follows money across blockchains, documents where it went, and proves whether it can be recovered. This work supports law enforcement, attorneys, and tax professionals.
Asset and cryptocurrency tracing — track funds across wallets, exchanges, and chains.
Cyber intelligence reports — show if funds are unrecoverable or moved to hidden accounts.
Regulatory and AML compliance support — make sure findings align with federal and state rules.
Investigation management tools — organize evidence using systems designed by former law enforcement.
If your crypto is stolen, the IRS won’t take your word for it. They want to see proof:
where the funds went
that you no longer control them
that you tried to recover them
CNC Intelligence fills these gaps. Their reports give your tax preparer verified data to file correctly. If the IRS questions your return, the documentation can support your claim and reduce the chance of penalties.
Let’s say you sent $10,000 in Bitcoin to what you thought was a real investment platform. It turns out to be a scam. CNC traces the Bitcoin to a laundering wallet, documents the loss, and creates a formal report. Your tax preparer uses that report to support a theft loss or capital loss claim, depending on your case. If the IRS asks for evidence, it’s all ready.
Losing crypto isn’t enough. You need to show that you can’t get it back. That means giving your tax preparer clear records—like wallet addresses, transaction IDs, and third-party investigations. Without that, it’s just your word, and the IRS won’t accept that.
If it’s a rug pull: You probably still have the tokens. They’re just worthless now. That makes it easier to show what happened.
If your wallet was drained: You don’t have the assets anymore. You need a tracing or a report that shows where the funds went and that you don’t control them.
Each case needs different support. And that can change how it’s taxed.
Under the 2017 Tax Cuts and Jobs Act, personal theft losses are no longer deductible. Losses from profit‑seeking activities (investment scams) may still qualify as capital losses—but only if well documented.
CNC Intelligence traces the stolen funds, identifies wallets, and confirms the loss.
They compile investigative reports, police filings, and AML documentation proving the funds are permanently gone.
Your crypto tax professional uses this evidence to:
Prepare IRS‑compliant filings
Claim capital losses where allowed
Minimize your tax liability
Defend you during an IRS audit
CNC Intelligence is trusted globally by law firms, regulators, and financial institutions. Here’s why:
They are not general accountants. They’re cyber intelligence experts focused solely on tracing digital assets and proving crypto losses.
Their team consists of U.S.‑certified cyber investigators working on six continents.
They use OSINT, HUMINT, CYBINT, and FININT techniques to follow funds across blockchain and off‑chain systems.
They understand U.S. AML rules, IRS documentation standards, and cross‑border compliance requirements.
They handle sensitive data with law‑enforcement‑grade security protocols.
Most tax pros aren’t trained to deal with crypto scams. You’ll need someone who can prove what happened with hard data—not guesses.
Tax rules around crypto losses are specific. If someone hasn’t worked with scam victims before, they probably won’t know what records to pull or how to format them for the IRS.
Crypto wallets don’t come with names. You need someone who can connect activity to actual people or entities. That means tracking tokens across different chains and using outside tools—not just spreadsheets.
Good crypto tracing firms often work alongside investigators, not just tax preparers. That’s a sign they know how to build real reports—not just guesses.
Some firms give a PDF with charts. That won’t hold up if the IRS asks questions. You want reports that clearly show when control was lost and how the assets moved.
Being scammed in crypto doesn’t erase your tax obligations. Without proper documentation, you risk audits, penalties, and paying tax on funds you no longer control.
CNC Intelligence provides the forensic investigation and reporting that crypto scam victims need. Their work gives crypto tax professionals the evidence required to file accurate, compliant returns—and, when possible, to claim capital loss deductions.
If you’ve lost crypto to a scam:
Get forensic tracing first.
Work with a crypto‑specialized CPA.
Stay compliant with IRS rules.
With the right team, you can protect yourself, minimize your tax burden, and avoid future legal issues.
1. Do I still need to report stolen crypto to the IRS?
Yes. Even if the funds are gone, the IRS expects a full report.
2. Can I deduct stolen crypto on my taxes?
Sometimes. If the loss was investment-related and you can prove it, you may be able to claim it as a capital loss.
3. What proof does the IRS want for scam losses?
They look for detailed records: wallet activity, transaction hashes, and case documentation. Law enforcement filings and third-party tracing reports help back it up.
4. Can CNC Intelligence help recover funds?
They focus on tracing. Sometimes that leads to recovery, especially if legal action is involved. But even when funds can’t be returned, the tracing can still be used to show the loss clearly.
5. Why isn't tax software enough?
Most tools can’t tell the difference between a trade and a theft. They also don’t include evidence that the IRS accepts in audit situations.
6. Can the IRS audit scam-related claims?
Yes. If your loss is flagged or lacks documentation, the IRS might reject it and charge extra tax or penalties.
7. How does CNC help with tax filings?
They give tax professionals the forensic reports they need—clearly showing how and when funds were lost. That helps tax preparers report things correctly and helps clients avoid issues later if the IRS asks questions.