How to deactivate a lost iPhone?

This support article outlines using the Find My service for locating a lost iPhone, iPad, or iPod touch --> Find your lost iPhone or iPad with Find My - Apple Support The second half of the article has a list of things to do to secure data and prevent others from using a device.

- There is a case for NOT doing the step where you remove the device from your account. Removing it would disable Activation Lock and make the device usable to a thief or a finder. As long as you set Lost Mode and/or erase the device, it will be not be recognized as a trusted device. This information is recommended by Apple in this thread I lost my iPhone - Apple Community

- The Find My service described in the article is the only recovery feature Apple offers. It must be set up before the device is lost.

This is an user to user forum, apple is not actively participating here

Please see this link on how to mark your device. as lost

While you look, use Mark as Lost to keep your device and information safe. When you mark your device or item as lost, it locks your device with a passcode or your Apple ID password.

You can also display a message that helps someone return your device or item.

1. In Find My, select your missing device or item. If you don't have an Apple device to use Find My, use iCloud.com/find.
2. Scroll down to Mark as Lost (or Lost Mode), then select Activate (or Enable).
3. Follow the onscreen steps if you want to display your contact information on your missing device or when someone scans your AirTag with their iPhone or smartphone.
4. Select Activate.

You might also change your Apple ID password to be sure, as You;re afraid that the device has gotten compromised.