You will see a warning on the Transactions page when Coinpanda detects that it appears you are selling more of a coin than you actually own at the time of the transaction.

Why does this happen?

Let’s assume you have bought 2 BTC on Kraken for $10,000. You then withdraw the 2 BTC and deposit them into your account on Binance to trade other coins later.

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.

Coinpanda assumes a cost basis equal to zero if we are missing the purchase history of a coin sold. This is a conservative approach and will result in higher gains (and more tax) than necessary. This explains why we stress the importance of importing all your past transactions into Coinpanda for ALL years of trading. We recommend reading the article How to ensure accuracy of tax calculations for more information.

This is how it looks like on the Transactions page after importing the trading history from Kraken:

Most common causes

The most common causes for warning trades are the following:

  • You haven't imported your complete trade history from all exchanges you have bought or sold cryptocurrencies on

  • You have connected all your exchange accounts, but not all transactions were imported due to Exchange API limitations

  • You have received airdrops, rewards, bonuses, interest, or distributions from exchanges that have not been accounted for

  • You forgot to import transactions for crypto received from mining or staking

  • You have received crypto as a gift and forgot to account for this

  • If the negative coin balance is very small, the warning trade might be caused by a rounding error and can therefore be ignored. This can happen especially when importing CSV files from some exchanges.

Read also:

Does this warning 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 warnings?

If the missing amount is very small, 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.

I have many warnings for small amounts - how can I get rid of these?

Luckily, this is actually quite easy! There are several ways of doing this, but here is what we recommend:

  1. Summarize the total amount missing from all warnings for each coin.

  2. Add a Receive transaction for each coin and the total amount on a date prior to the first warning to the generic Excel template.

  3. Import the file to a Custom wallet on Coinpanda. You can for example rename the wallet to "Adjustments"

  4. Voila - warnings disappeared!

Let say that from Step 1 we would end up with these missing balances:

  • BTC: 0.00056 + 0.00012 + 0.0008 + 0.00012 = 0.0016 BTC

  • ETH: 0.0023 + 0.00044 + 0.087 = 0.08974 ETH

We will then add this to the Generic file template like this:

We are working on a new feature to automate this so that you don't need to summarize the missing balance for each coin manually. We currently don't have an ETA but we hope to release this later this year.

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.

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