Capital Loss on Partially Recovered Bitcoin from Mt. Gox

Following the collapse of the Mt. Gox cryptocurrency exchange in 2014, many users had their Bitcoin holdings locked on the platform. Recently, after years of legal proceedings, some users received partial distributions, recovering only a portion of their original holdings while the rest remain permanently unrecoverable. For example, a user who originally purchased 20 BTC at $30 each and received 4 BTC in the court distribution is left with 16 BTC deemed lost. For UK CGT purposes, would the user be able to claim the capital loss based on the market value of the 16 BTC at the time of the court distribution (when the loss was crystallized), or is the loss limited to the original purchase cost of $30 per BTC? Would negligible value claim rules apply in this scenario to use the market value at the time the loss became concrete?

Hi,
Please refer  to Cryptoassets Manual - Cryptoassets for individuals: Capital Gains Tax: being defrauded - HMRC internal manual - GOV.UK (www.gov.uk) and Capital Gains Manual - Introduction and computation: occasions of charge: assets lost/destroyed/negligible value: involuntary transfers - HMRC internal manual - GOV.UK (www.gov.uk). You may also find
HS286 Negligible value claims and Income Tax losses on disposals of shares you have subscribed for in qualifying trading companies (2021) helpful - this talks about shares but the same rules about how to calculate the loss apply to cryptoassets. The claim must be made within 2 years of the decision being made that the asset is of negligible value.
Thank you.