Crypto Lenders Hit Investors With Big Tax Bills for Frozen Funds (1)

Roman Smolkin thought things couldn’t get any worse after his account with bankrupt crypto lender Celsius Network was frozen, trapping more than $200,000 of assets.

Then came the tax bill.

The 42-year-old software designer in Florida first started investing with Celsius in April 2021, enticed by the double-digit yields it offered for crypto holdings stored on the platform. He even took out a home equity line of credit for $125,000 and put it all in Celsius. When the lender halted withdrawals in June, Smolkin went through a range of emotions — anger, frustration and then resignation that the money was gone.

The arrival of a ...