You may be able to take a § 1341 credit for the amount of the repayment in excess of $3,000 that you previously included in your taxable income (and paid tax on). See TurboTax article, "What is a claim of right repayment?" for detailed guidance on figuring and entering this credit.
In your fact pattern, you state that you only received about 1/3rd of the repayment amount as interest income; so it seems 1/3 of the repayment would represent a repayment of previously reported interest income for purposes of the 1341 credit. You also state you liquidated all of your crypto positions in a prior year; presumably, some amount of the repayment total would be figured as previously reported and taxed capital gain income.
Importantly, to the extent that your settlement repayment is offset by any distributions you received from the bankruptcy estate, that portion of the repayment is nondeductible / nonrecoverable (since you already recovered it out of the bankruptcy estate). And if your bankruptcy estate distributions at all exceed the amount lost in preference repayment, those amounts would be includable in the year received and taxable as income.
Because you state that you closed your account with Celsius before their bankruptcy proceedings, and you state that you then reinvested those redemptions of basis and earnings into other, later crypto investments, then I do not see why you would take a capital loss for the amount of the 2025 lawsuit settlement. Did you ever fully forfeit your total original cost value in the crypto or stablecoin investments due to bankruptcy or lawsuit proceedings? If not, I would not characterize this as a total loss of investment value or worthless security. Instead, any repayment can offset net gains / income (such as bankruptcy distributions) in the year received, or be calculated as repayment of previously included and taxed income. You should seek the guidance of a crypto-focused investment tax specialist (CPA or lawyer).
See also: IRS - FAQs Related to Ponzi Scenarios for Clawback Treatment
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