Warning transactions happen when Coinpanda detects that it appears you are selling more of a coin than you own at the time of the transaction.
Why does this happen?
Let’s assume you have bought 2 BTC on Kraken for $10,000. Later you withdraw the 2 BTC and deposit them into your account on Binance to trade other coins.
If you only uploaded your Binance trading history, Coinpanda will have no way of knowing how you acquired your 2 BTC on Kraken. It will therefore look like the BTC appeared out of nowhere, and this will be shown as a warning on the Transactions page.
Coinpanda needs to know both when and how you initially acquired the BTC you sold on Binance. Without this information, there is no way to calculate your cost basis which is needed for tax purposes.
Most common causes
The most common causes for warning trades are the following:
You didn’t import your complete trade history from all exchanges you have bought or sold cryptocurrencies on
You have received airdrops, forks, or distributions from exchanges that have not been accounted for
If the negative coin balance is very small, the warning trade might be caused by a rounding error. This can happen especially when importing CSV files from some exchanges.
You forgot to include income from mining transactions
You have received crypto as a gift and forgot to account for this
Does this error message affect my tax reports?
Since there is no way of calculating the cost basis for the coins missing, Coinpanda will assume a cost basis equal to zero. This is the same as assuming you acquired the coins for free, which means your capital gains will be equal to what you sold the coins for. In this case, you will most likely end up paying more tax than you actually should.
What happens if I don't fix these errors?
If the missing amount is minimal, it will have a negligible impact on your final capital gains, and you can most likely ignore it. A simple rounding error from an exchange can cause small negative balances.
If the negative balance is high, you should try to fix the issue first. Start by making sure you have imported all transactions from all the years you have been trading. We have mentioned some other likely reasons above.
Can I get in trouble with the tax authority because of this?
No, you will not. As already mentioned, Coinpanda assumes a cost basis equal to zero for the missing coins. This means you will pay tax on the full amount and not get a deduction for the initial cost and is therefore a conservative approach.