Digital assets have been subject to some of the largest thefts in history. In fact, the largest crypto theft — in connection with the February 2025 $1.5 billion Bybit hack — dwarfs the Guinness Book of World Records’ entry for the largest bank robbery of $282 million. See “Crypto’s biggest hacks and heists after $1.5 billion theft from Bybit,” Reuters, Feb. 24, 2025. Sometimes, however, all is not lost and at least some portion may be recovered and available for restitution or return to victims.
While any recovery may be cause for celebration, unforeseen or unintended tax consequences can put a damper on the festivities. The tax due on the recovery of stolen crypto can depend upon several factors, including any deductions taken in connection with the initial theft, the type of property returned and intervening changes to its value, and other taxpayer circumstances.
Continue reading: The Return of Stolen Crypto Can Be a Taxing Event