> it means he has a realized gain of ~$333,000. Where did that money go? Generally, the way this works is this: 1. You realize your gain in 2017 by exchanging

> it means he has a realized gain of ~$333,000. Where did that money go? Generally, the way this works is this: 1. You realize your gain in 2017 by exchanging for, say, ETH, at BTC $19k. 2. BTC falls to $7k, and ETH falls in accordance due to arbitrage desks. 3. You owe taxes on the 2017 gain. You could liquidate your much smaller ETH position in 2018, but you could only deduct $10k per year for 10 years on the large(r than 100k) loss you took. My guess for how the OP has no assets left to pay the $50k liability is that they rode BTC down to $7k on margin. Buffett has a few things to say on the topic of leverage vs volatile assets.