CRA pulls in $100M from crypto audits as criminal cases stall

A group of auditors from the Canada Revenue Agency (CRA), specializing in cryptocurrency, has revealed that they are currently managing more than 200 cases and have gathered over $100 million in the past three years. Interestingly, the government agency reported that no criminal charges have been filed against anyone since 2020.

CRA has been initiating efforts to uncover a considerable amount of unpaid taxes. Following their findings, they discovered that approximately 40% of taxpayers using cryptocurrency platforms have neither filed their taxes nor complied with the regulations properly.

Concerning this situation, sources noted that documents connected to a Vancouver crypto firm demonstrated that the current major challenge that the federal government faces is struggling to address tax evasion. It also disclosed that the government is struggling to handle cases of illegal financing linked to cryptocurrencies. 

Sources with knowledge of the matter attempted to explain that some of the reasons for this struggle are due to the limited enforcement resources available in a place famous for its anonymity.

The CRA team raises concerns regarding crypto taxpayers

In a September CRA application submitted to the Federal Court, Canada’s Minister of National Revenue raised concerns regarding taxpayers’ use of the underground economy, fueled by cryptocurrencies and non-fungible tokens (NFTs), to evade their tax responsibilities. 

Considering the intense nature of the situation, the CRA’s key crypto auditor pointed out in related documents that they believe the country has not yet adopted a reliable method for identifying taxpayers operating in the crypto industry and ensuring that these taxpayers strictly adhere to the income tax reporting requirements.

Therefore, the team called for the urgent need to implement effective measures to curb the situation. In an attempt to play a role in this initiative, the CRA went to the Federal Court to seek permission to disclose the identities of thousands of customers from Dapper Labs Inc., a prominent firm in the NFT sector. This company also operates its own blockchain and provides its clients with crypto wallets, which are essential for storing digital assets.

When it was informed of the investigation, sources close to the matter revealed that the firm did not refuse to cooperate with the process. However, documents highlighted that the CRA initially wanted information concerning Dapper’s leading 18,000 users. After talks with company officials and their lawyers, this figure was reduced to 2,500 users. 

Notably, this move marked the second time a court has requested a Canadian crypto company to submit details about its clients in an investigation focused on exposing potential tax evaders. This kind of requirement is known as an “unnamed persons requirement” and is usually conducted under the Income Tax Act. 

Meanwhile, in an affidavit from Predrag Mizdrak, a project leader in the agency’s digital compliance and audit support division, he noted that the cryptoasset ecosystem commonly engages in the underground economy. 

Mizdrak made these remarks after his affidavit pointed out that the agency’s efforts to ensure crypto platforms comply with the guidelines put forth so far illustrated a substantial lack of compliance in this area.

He also mentioned that previous data showed that around 15% of Canadian taxpayers using cryptoasset platforms have either failed to file their taxes on time or have not filed them at all. Moreover, the agency reports that 30% of users who file tax returns on time are considered high risk for non-compliance. 

The increased cases of non-compliance in the crypto space ignite controversy 

Mizdrak’s affidavit highlighted that the preference for using cryptoassets increased significantly during the COVID-19 pandemic. 

This rise resulted in more compliance issues for the CRA due to the habit of individuals hiding their identities in the cryptocurrency world, the high volume of transactions carried out, and the streamlined process of creating accounts on various cryptocurrency platforms across different countries.

This finding raised concerns about safety in the ecosystem. To ease tension, the agency issued an email statement noting that it has 35 auditors in its cryptoasset program, who have been assigned to handle more than 230 cases and collect considerable taxes through audits. This included $100 million earned in the last three years.

They also mentioned that between 2020 and early 2025, five criminal investigations related to digital assets had been commenced, with four still active as of March. Still, no charges have been filed.

The agency explained, “The CRA’s criminal investigations are complicated and often take years to finish.” 

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