Once you know the investment is worthless with no reasonable prospect of recovery, you can file the loss. Your basis is used for all calculations, not the fair market value at the time of incident.
How to file the loss varies with the circumstances. Collapse, scam, or Ponzi scheme:
- Scam: you can show "criminal intent"-perhaps you have a statement from the liquidator or police report, etc. you can claim theft on Form 4684. See @MarilynG1 here for instructions. Be sure to select that this is Business or Income Producing property
- Collapse: If instead, the platform made poor decisions and went bankrupt, you claim a capital loss on From 8949, Sch D.
- Ponzi: If the government has identified it as a Ponzi scheme you may qualify for the Safe Harbor.
Be sure to keep all your records as this is a high scrutiny area by the IRS.
See What To Know About Cryptocurrency and Scams - FTC
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