This article may be useful to users who:

Before making any manual changes, it's strongly recommended that you check your transaction history for accuracy up to this point. See How to ensure your tax report is accurate.

If you still have access to the tokens that lost value and it's possible to sell them (e.g. there still is a pool in some DEX where you can sell it, or there are offers on an NFT marketplace you can accept) then this is the preferable way to dispose those assets, as there is a clear 3rd party that accepts your trade.

You can use some 3rd party website like sol incinerator or send it to a burn address (for Ethereum - 0x000000000000000000000000000000000000dEaD). Be sure to confirm with your tax advisor if loss on tokens sent there (disposal without a clear counter-party) can be claimed.

If you sell/dispose tokens like that, you do not need to add any manual transactions. Alternatively, you can also create a manual withdrawal of this asset in Koinly only, without a "physical" transaction.

You may need to adjust the disposal depending on the tax treatment - check the section How to adjust write-off transactions below.

If you lost funds on an exchange that were bankrupt, you probably cannot claim any losses until bankruptcy proceedings are over. These cases can become quite complicated depending on reimbursement schedule, so always confirm the next steps with your accountant.

For some examples of how to handle bankruptcies, check:

If your wallet was hacked and a hacker got control over your assets, you will most likely have withdrawals from this wallet (made by the hacker) on the day of the hack.

Because of that, there's no need to add any transactions manually but you may want to adjust them - check the section How to adjust write-off transactions below.

If you lost access to the whole wallet and can no longer withdraw funds from it, you may want to remove those assets from your balances. You can't just "mark a wallet as lost" in Koinly, so to document that you no longer have control over the assets in this wallet, you need to create manual withdrawals of each asset in this wallet, amount equal to the total balance, dated on the day you lost your private keys.

After you do, disable the API connection in this wallet: the reported balances will no longer be relevant since you added manual withdrawals to this wallet. And, since you lost access to it, there won't be any new transactions there.

You may want to adjust those withdrawals, depending on the preferred tax treatment - check the section How to adjust write-off transactions below.

If you sent your tokens to a 3rd party under a premise of investment (e.g. deposited funds to a "high yield strategy fund") but it turned out to be a scam and the assets are irretrievable, then there's no need to add any manual transaction since you already have a withdrawal from your wallet, but you may need to adjust it.

Any modifications to the withdrawals depend on how the disposal should be treated and how you later document this loss when filing your taxes. Below we share some possible scenarios on how to adjust the disposal (withdrawal) of the asset:

If you can claim the cost of acquisition of this asset as a complete loss together with the rest of your capital gains:

Your total cost of acquisition (cost basis) of this asset will reduce your capital gains. A withdrawal like that is equivalent to "I sold this asset for $0".

If you can claim the cost of acquisition of this asset as a complete loss but have to file it separately to your capital gains (e.g. in a different field):

If you have to consider this disposal like a normal sale, without any actual write-off:

Mind that this disposal may generate a capital gain, depending on your cost of acquisition and current market value.

If you cannot claim any loss on those tokens but also don't need to report any hypothetical gains you had on this asset (due to its price appreciation):