So basically, if you disposed of any of the bitcoin in any way other than gifting and you made a profit, EVEN IF IT WENT TO THE SCAMMERS, this is taxable income.
If you DID have gains on your bitcoins, then you WOULD report this. If you did anything other than purchase your Bitcoins and then gift them, you will need to report it on your return. So if you bought dinner with your Bitcoin, this would be considered selling it and would be a reportable transaction. So if you have gains and losses on Cash App, then it sounds like you likely have some type of reportable transactions. The second you cash out or use the currency to pay for something, it becomes a reportable event to the IRS.
When deciding whether or not this is reportable, you do not consider the scam part. You ONLY consider the disposal and gains/losses (NOT related to the scam) The scam does not in any way shape or form change how you would report your Bitcoin transactions.
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