FTX US Crash: How to Report US Taxes with Koinly

How to do your FTX US taxes with Koinly

FTX US was set up to comply with the stricter regulations in the US around prediction crypto contracts. As of November 2022, FTX US has halted withdrawals and parent company FTX has filed for bankruptcy due to financial troubles. If you have taxable transactions from earlier in the financial year, you still need to report them to the IRS. Here's how.

1. Sign up to Koinly and choose your country (USA) and currency (USD)
2. Connect FTX US with Koinly to import all your FTX US trades safely and securely
3. Koinly categorizes FTX US transactions into gains, losses and income
4. Koinly calculates your FTX US Capital Gains Tax and FTX US Income Tax
5. Download your FTX US tax report from Koinly
6. File your FTX US taxes online with the IRS, using a self-filing tax service like TurboTax or with your crypto tax accountant

What can I do to recoup my FTX US losses?

FTX has filed for bankruptcy. This means anyone who can prove that the exchange owes them money will have to get in line to request repayment.

This will be a complex legal situation, as courts may have to decide how to treat individual clients, and where they rank in priority among other creditors. It is possible that your details as an investor on FTX are disclosed to the US authorities.

As at mid-November 2022,  the situation with FTX US is still unfolding and there’s much uncertainty for investors regarding whether they'll recoup any of their losses.  Here's what you need to know:

• FTX has currently filed for Chapter 11 Bankruptcy. While this sounds like bad news, it means customers with assets on FTX and FTX US may still see (some) funds returned. Unfortunately, this could take years - similar to the Mt. Gox proceedings.
• Currently, FTX US funds are frozen and withdrawals are halted. This means from a tax perspective there is nothing you can do to realize your loss. Your funds may still be recovered in the future, so you cannot deduct any losses.
• If investors do not receive any funds back from proceedings, they may be able to claim a worthless investment loss in the future and offset this against any gains.
• For investors impacted by the recent hack, the IRS does not recognize theft as a realized capital loss.
• At the moment, the best thing investors can do is get all the transaction data they can from FTX US as proof of their losses for the future.

Watch how to do your FTX US taxes fast 

How are FTX US transactions taxed?

Regardless of the exchange’s collapse, the IRS is clear that crypto, including your transactions on FTX US, may be subject to Capital Gains Tax or Income Tax. The tax you'll pay depends on the specific transaction you've made and how long you've held the asset:

• Capital Gains Tax: If you sell or swap crypto you've held for more than a year on FTX US and make a gain, you'll pay Capital Gains Tax on that gain. As well as this, if you spend crypto you've held more than a year using the FTX card, and the value of your crypto has increased, you'll pay Capital Gains Tax on that perceived gain.
• Income Tax: Meanwhile, if you sell, swap or spend crypto you've held for less than a year and make a gain, you'll pay Income Tax on that gain. As well as this, if you're seen to be receiving new tokens on FTX - for example, airdrops or staking rewards - you'll be viewed as having additional income and likely need to pay Income Tax upon receipt.

Learn more about how crypto is taxed in the USA in our Ultimate USA Crypto Tax Guide.

Does FTX US report to the IRS?

Yes. FTX US reports to the IRS in order to remain compliant and operational in the US. FTX US issues some users with Form 1099-MISC - and the IRS gets an identical copy.

How do I get my FTX US tax forms?

You need to report any short-term and long-term gains or losses on Form 8949 and Schedule D, as well as any additional income from crypto on Form 1040 Schedule 1 (or Schedule C if you're self-employed) and file all these forms with the IRS as part of your annual tax return.

You can do this yourself, but it's time consuming. You'll need to identify each taxable FTX US transaction, the kind of tax that applies, calculate your short and long-term capital gains and losses and identify the fair market value of any crypto income in USD on the day you received it. Worse still, the IRS expects you to report every disposal (so anytime you sold, swapped or spent crypto) on Form 8949. Suffice to say, for active investors this is a mammoth task.

Which is why most investors opt to use crypto tax software like Koinly. Koinly does all of the above for you and generates a variety of US crypto tax reports including the IRS Form 8949 & Schedule D, TurboTax Report, TaxAct Report and more. All you need to do is connect via API or CSV, here's how.

How to connect Koinly and FTX US via API

On FTX US

1. Log in to FTX US
2. In the top right corner, select your account name
3. Select API from the drop down menu
4. Select create read-only API key
5. Copy the API key and the API secret

On Koinly

1. Sign up or log in to Koinly and go to wallets
2. Select add new wallet: FTX US
3. Select set up auto-sync
4. Paste your API key and API secret
5. Select secure import

How to import your FTX tax report CSV file to Koinly

On FTX US

1. Log in to FTX US
2. In the top right corner, click on your account name
3. You'll need to download the various CSV files of any transactions you've made on FTX US. Where applicable, this will include your trade history, PnL and rewards. If you head into any of these pages from your profile, you'll be able to download the relevant CSV file
4. Download the CSV file(s)

On Koinly

1. Sign up or log in to Koinly and select wallets
2. Select add new wallet: FTX US
3. Select import from file
4. Upload your CSV files
5. Select import

How do I troubleshoot my FTX US integration to Koinly?

Having trouble with the API or CSV FTX integration? Not to worry - there’s plenty of help available:

• Head over to our help center
• Hit up our discussion boards - we might have already answered your question
• Ask us on social media - we're on Twitter or Reddit
• Not on social media? Join our discord!
• Contact us on email or live chat
• Got a feature request? Give us feedback on Canny