What attempts have been made to locate the access to the wallet? Do we have proof of the crypto balance going into the cold wallet?
What safeguards did they put in place to prevent exactly this kind of scenario from occurring?
It smells like Illegal Early Access of funds with a VD to make things look simpler.
I would be looking towards a Qualification under Reg.6.17 for the IEA and s.62 for sole purpose, as the fund was clearly set up for a different purpose than to assist with retirement savings and growth of those savings.
I don’t believe the crypto can be written-off until there is sufficient evidence from the member to support that it is actually lost and a Part A qualification will also be needed due to the SMSF operating whilst having a negative position.