How do you report bitcoin transactions that were part of a scam?

[clsmth31]

I am asking this because the bitcoin transactions that I was a part of turned out to be a blackmail/sexploitation scam.

[rjs]

There is no federal tax deduction for losses due to a scam, unless it was a Ponzi scheme. Based on what you said, the scam does not seem to be a Ponzi scheme, so you do not enter the loss anywhere on your federal tax return.

A few states might allow a deduction for a theft loss.