The story about the lost keys is bullshit. They sold or traded away the coins, just like Gox did with Willybot. They're all doing it. The exchange bots follow Bitmex (you know, the derivatives exchange where they drive the price of Bitcoin down) around like little bitches. At some point, there will be a serious supply shortage. Get your coins off exchanges, even big exchanges.
I don't want to be the one to break this to you, but this is the wild Wild West. You really did say it yourself, and to put it kindly, "you're out of luck",
I would say the best thing you can get out of it now is to write it off as a capital loss on your taxes. At least it will save you money there. So it's not all bad I guess.
As far as I'm concerned, they have only proved they have lost access when they publish the wallet addresses and their customers can independently verify no transactions have occurred since the guy died.
A common meme. It usually goes like this:
Taxman: "we consulted with <insert-favorite-exchange/honeypot> and determined that last year your bitcoin-based trading activities yielded a capital gain of X, which you failed to declare"
You: "yeah, you know, agent, I declared 0 because I got 0; those profits I withdrew to my hardware wallet which got unfortunately **lost in a terrible boating accident**"
I've always wonder why people think this would exempt them from taxes... as if any state would take "but I lost all my money" as an excuse. Taxes are due the moment a taxable event happens, if you realized capital gains you owe taxes on them the minute you sell. If you realize losses you can write off some of them up to a certain limit.
If they can reasonably prove that the taxable event happened (i.e. you traded on an exchange which knows your identity and cooperate with your taxer), you owe them this money. No matter your financial standing when they contact you... Aside for filling some form of personal bankruptcy, debts don't vanish this way. And even if you receive a bankruptcy discharge, most taxes will not be eliminated by it either.
As the saying goes, nothing is certain but death and taxes.
> Taxes are due the moment a taxable event happens
Yes, but losing the hardware wallet isn't a taxable event, and neither is sitting back and watching the price shoot up, i.e., "hodling". A sale (including for other crypto, i.e., an "exchange"), is a taxable event. No sale, no exchange, no transfer -=> no taxable event.
I get the meme side of it, yet I've seen users asking for help about their lost bitcoins here and there were answers telling them that their post was most likely just an attempt to cover their ass when they'll make their tax declaration... So I suspect some people do think this kind of stuff works. I thought it was a good occasion to remind them it does not.