In your wallet, you will sometimes find tokens you didn't know you own. These may be harmless airdrops, but in most cases, these will be malicious tokens that were sent to you to steal your funds. These tokens are completely worthless and cannot be traded (any action taken involving those tokens may lead to the loss of all your funds - aka wallet draining).

Sometimes you also own tokens that are now worthless because the project closed, went bankrupt, or was a malicious project started with the intent to steal the money people invested in it (aka rug pull).

The article below provides some guidance on how to deal with such tokens in Koinly - note that we present different options and do not know which ones are possible/allowed in your country - contacting a crypto tax accountant is highly recommended in such cases.

Spam/Scam tokens and NFTs

🔴 Warning: Do not interact with those tokens "in reality" - do not send them to a different wallet, do not try to trade them, etc. Those tokens often have malicious code inside their contract and "transfer" can do something else than it says it does.

These are worthless tokens sent to your wallet, equivalent to spam emails in your inbox selling cheap drugs or insurance. The symbol of the token is sometimes a link instead of the usual ETH, BTC, etc.

What our users usually do with tokens like that:

🟢 Solution A: If you want to remove the token from your reports without any trace:

  • Soft-delete the deposit, as if the token was never sent to their wallet or

🟢 Solution B: If you want to report that this token was manually removed from your reports:

  • In Koinly, they add a manual withdrawal for the full amount of this token and tag it as Lost, adding a description accordingly

🟡 Note: those tokens often need to be identified in Koinly using their contract address, as the name of the token is non-descriptive and there are multiple tokens with the same name. You can find the contract address of the exact token you received by checking the transaction on the explorer.

See the gif below showing how to add a withdrawal of a token using the contract address:

Rug pulls, NFTs that are completely worthless and illiquid (cannot be sold anymore)

Sometimes assets that you bought have depreciated in value to the point when they are worth essentially $0. Not all countries allow you to write off failed investments as losses - it depends on the guidelines published by your tax office.

🟢 Solution A: If you just want to remove this asset from your holdings, without realizing losses:

  • Send the token to a burner address* or create a manual withdrawal in Koinly

  • Tag the withdrawal as Lost

🟢 Solution B: If you want to realize losses on this asset equal to the cost of acquisition of this asset:

  • Send the token to a burner address* or create a manual withdrawal in Koinly

  • Edit the worth of the withdrawal and set it to $0

  • Do not add any tags

🟡 Note: There are websites that allow you to sell your illiquid assets for some dust amount. Those 3rd party websites are not affiliated with Koinly and we cannot guarantee they are safe, but due to this being a common inquiry, we provide an example of a service like that: https://harvest.art/

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