I found this article helpful
https://news.bloombergtax.com/tax-insights-and-commentary/victims-of-crypto-and-nft-fraud-can-take-t...
Prior to 2018, losses due to theft could be deducted as an itemized deduction, but the TCJA limited the theft loss deduction to losses attributable to a federally declared disaster until 2025.
There is a special exception for victims of Ponzi-type investment schemes. In 2009, the IRS published Revenue Ruling 2009-9 to provide tax relief to the victims of Bernie Madoff’s $64 billion Ponzi scheme. In this ruling, the IRS stated that if any money put into an investment account with the expectation of profit and is found to be fraudulent, any loss is considered a business theft loss and not a personal theft loss. Therefore, the personal theft loss limitation stated above does not apply.
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