This FTX story is just incredible, layered on top of the already incredible bitcoin story.
The amount of weird financial contagion caused by this is staggering.
One day in November, there were bitcoin trades resulting in 10 billion in realized losses. There are estimates that the sum total unrealized capital losses in bitcoin right now - that's if every single person with an underwater bitcoin could sell their bitcoin at the current price - would be 200 billion dollars.
Now given that crypto really is "sort of" a zero sum game, for 200 billion in losses to occur, someone cashed out major bank at the top, selling bitcoin to the current losers. The question is - "who were they, what nationality, and did they claim the income". Reasonable scenario is that the second question is mostly non-US citizens (Chinese bitcoin miners) and the 3rd is "No" (including US citizens). So the US Government won't see much of the capital gains on the zero sum gain going up, but will have US citizens with hundreds of billions of dollars of carryover capital losses.
It's even worse than zero sum because mined bitcoin is nominally zero cost, yes, you pay for the equipment and the electricity, but you aren't really taking US dollars and purchasing bitcoin. I have no clue if there is anything in the tax code if say, you spent 2k to mine an 18k bitcoin, then sell it. What the hell is even the cost basis of the bitcoin you mined? Do you pretty much need to file the bitcoin mining as a small business?