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Lost & Stolen Crypto

Losing the private key to a wallet containing your cryptoassets cannot be treated as a disposal for capital gains tax purposes. The private key still exists as part of the cryptography, albeit it is not known to the owner any more. Similarly the tokens will still exist in the distributed ledger.
The IRS considers this a theft and personal casualty loss and as such it cannot be deducted from a tax return.

The IRS has not yet issued any specific guidance on crypto losses (such as scam ICOs). It may be possible to submit form 8949 claiming your cost basis and $0 in proceeds but not all tax profesionals agree about this approach. It's always best to consult a qualicfied profesional before proceeding.
If the individual can prove they did hold the cryptoasset tokens at some point (ie they received the tokens they contracted for), yet the tokens have become worthless, they can file a negligible value claim and claim a capital loss on their Tax Return. If the tokens were worthless when acquired, then a negligible value claim wonโ€™t be allowed.
However, those who did not receive the cryptoasset tokens that they paid for may not be able to claim a capital loss according to the HMRC guidance at CRYPTO22450.

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