We have the same problem so we tried to do some tests (yesterday).
- Trying to login on a LA, USA (real) account from a location in Europe. Clicked "It was me" but ended in a loop. This was all done on an iPhone with the latest Instagram App and a 4G mobile network. No proxies.
- Did this test vice versa; login on an European account in LA, USA - ended with the same loop problem.
Now using a proxy from San Francisco in Europe, we were able to login on the LA account. And also using a proxy from Frankfurt, Germany we were able to login on the European (German) account from a location in LA.
So as conclusion; it would be very strange if Instagram disables people to login from a different country on someones Instagram account. In that situation we are not able to manage someones Instagram account that lives in LA for example, without using any relations to 'bot' services. As an international social media platform that would be an odd decision, in my opinion.
I hope this is just a bug from Instagram and that they will recover it, but we never know what will happen. Fortunately I can read some messages that this is already recovering a little and that some people are already able to login successfully using proxies.
Hope we can keep posting updates here about what people are experiencing and if there is a solution for it in the meantime.