Canadian Tax Agency Investigates Potential Crypto Tax Evasion in Dapper Labs Users

• CRA auditors manage 230+ crypto-related cases, recovering $100 million in taxes over three years.

• Approximately 40% of cryptocurrency users fail to file taxes or comply with regulations properly.

• 15% of Canadian crypto taxpayers do not file returns at all, with 30% of filers flagged as high-risk for non-compliance, per CRA data.

Discover how CRA crypto audits are tackling tax evasion in Canada’s cryptocurrency sector. Learn about compliance challenges and enforcement efforts in this in-depth analysis. Stay informed on crypto tax regulations today.

What Are the Key Findings from CRA Crypto Audits in Canada?

The Canada Revenue Agency (CRA) has intensified its CRA crypto audits to address widespread non-compliance among cryptocurrency users. In the past three years, specialized auditors have managed over 200 cases, recovering more than $100 million in unpaid taxes. Despite these efforts, the agency has not pursued any criminal charges since 2020, underscoring the complexities of enforcing tax laws in the rapidly evolving digital asset landscape.

How Is the CRA Addressing Tax Evasion in the Crypto Sector?

The CRA’s approach to tackling tax evasion in the crypto sector involves targeted audits and court-mandated disclosures to identify non-compliant taxpayers. According to documents from a September application to the Federal Court, the agency expressed concerns over the use of cryptocurrencies and non-fungible tokens (NFTs) to participate in the underground economy. This has led to requests for user data from prominent firms, demonstrating a proactive stance amid resource constraints.

Predrag Mizdrak, a project leader in the CRA’s digital compliance and audit support division, highlighted in an affidavit that the cryptoasset ecosystem often intersects with underground activities. He noted that prior assessments revealed substantial non-compliance, with about 15% of Canadian users of crypto platforms failing to file tax returns and 30% of those who do file being deemed high-risk. These statistics underscore the scale of the issue, particularly as cryptocurrency adoption surged during the COVID-19 pandemic, complicating oversight due to anonymous transactions and global platform accessibility.

To bolster enforcement, the CRA maintains a dedicated team of 35 auditors focused on crypto assets. This unit has initiated over 230 audits, contributing to the $100 million in collections. Sources familiar with the matter indicate that challenges persist due to limited resources and the inherent anonymity of digital assets, yet the agency continues to refine its methods for better compliance monitoring.

Frequently Asked Questions

What Percentage of Crypto Users in Canada Are Non-Compliant with Tax Filing?

According to CRA assessments, around 15% of Canadian taxpayers using cryptocurrency platforms have not filed their tax returns at all. Additionally, 30% of those who file are considered high-risk for non-compliance, while broader findings show that 40% of crypto users overall fail to meet reporting or regulatory requirements properly.

Why Has the CRA Not Filed Criminal Charges in Crypto Tax Cases Since 2020?

The CRA’s criminal investigations into digital assets are complex and time-intensive, often spanning years to complete. As of early 2025, five such investigations have been launched since 2020, with four remaining active, but none have resulted in charges due to the intricate nature of gathering evidence in the crypto space.

Key Takeaways

• Significant Tax Recovery: CRA crypto auditors have secured over $100 million from more than 200 cases in three years, demonstrating effective civil enforcement.
• Compliance Gaps Exposed: Data indicates 15% non-filing rate and 30% high-risk among crypto users, fueled by pandemic-era adoption surges.
• Enforcement Hurdles: No criminal charges since 2020 highlight resource limitations and anonymity issues; users should prioritize accurate reporting to avoid audits.

Conclusion

The CRA’s ongoing crypto audits and efforts to combat tax evasion in Canada’s cryptocurrency sector reveal a landscape marked by substantial non-compliance and innovative enforcement tactics. By seeking court orders for user data from firms like Dapper Labs Inc. and maintaining a specialized audit team, the agency is working to ensure fairness in the digital economy. As the crypto space evolves, taxpayers are urged to stay compliant with reporting requirements to mitigate risks, paving the way for a more transparent and regulated future in cryptocurrency taxation.

The Canada Revenue Agency’s (CRA) cryptocurrency audit program has become a focal point for addressing fiscal responsibilities in the digital asset realm. A dedicated group of auditors specializing in crypto matters is currently overseeing more than 200 active cases. Over the last three years, their work has resulted in the collection of over $100 million in outstanding taxes. Notably, since 2020, the agency has not initiated any criminal proceedings against individuals involved in these cases.

The CRA’s initiatives aim to identify and rectify significant instances of unreported income from cryptocurrency transactions. Investigations have uncovered that nearly 40% of individuals engaging with crypto platforms have either neglected to file their taxes or have not adhered to established compliance protocols. This revelation points to a broader challenge in ensuring regulatory adherence within the sector.

Documents associated with a Vancouver-based cryptocurrency enterprise illustrate the federal government’s primary obstacles: combating tax evasion and managing illicit financing tied to digital currencies. Informed sources attribute these difficulties partly to the scarcity of enforcement resources in an environment renowned for its privacy features.

In a formal submission to the Federal Court in September, Canada’s Minister of National Revenue voiced apprehensions about how taxpayers are leveraging the underground economy—propelled by cryptocurrencies and NFTs—to sidestep tax obligations. The CRA’s lead auditor on cryptocurrency issues emphasized in accompanying paperwork that the nation lacks a robust system for pinpointing crypto industry participants and enforcing income tax reporting standards.

In response, the team advocated for swift implementation of robust countermeasures. As part of this push, the CRA petitioned the Federal Court for authorization to obtain the identities of thousands of clients from Dapper Labs Inc., a key player in the NFT market. This firm maintains its own blockchain network and supplies crypto wallets for securely holding digital assets.

Upon notification of the probe, the company did not resist collaboration. However, after negotiations with executives and legal counsel, the initial request for data on 18,000 top users was scaled back to 2,500. This action represents the second instance where a Canadian court has compelled a crypto business to provide client information in a tax evasion inquiry, utilizing an “unnamed persons requirement” under the Income Tax Act.

Predrag Mizdrak, from the CRA’s digital compliance and audit support division, stated in his affidavit that the cryptoasset domain frequently overlaps with underground economic activities. This observation followed evidence from the agency’s compliance drives on crypto platforms, which exposed widespread deficiencies in adherence.

Earlier evaluations indicated that 15% of Canadian crypto platform users have missed tax filing deadlines or omitted filings entirely. Furthermore, 30% of timely filers are viewed as elevated risks for non-compliance.

Mizdrak’s affidavit further detailed how cryptocurrency usage escalated during the COVID-19 period, exacerbating CRA compliance burdens. Factors include user anonymity, the sheer volume of global transactions, and the ease of account setup on international platforms.

These elements have heightened ecosystem vulnerabilities. In a statement via email, the CRA clarified that its 35 crypto program auditors are managing over 230 cases and have amassed $100 million through audits in the recent three-year span.

From 2020 through early 2025, five criminal probes into digital assets were started, four of which remain ongoing as of March. No charges have materialized to date. The agency elaborated that such investigations are intricate and typically require years to resolve.

The CRA’s crypto audit endeavors reflect a commitment to fiscal integrity amid the burgeoning digital economy. By targeting high-risk areas and collaborating with the judiciary, the agency is methodically closing compliance gaps. Taxpayers in the crypto space must recognize the importance of accurate reporting to navigate these developments successfully.

Challenges in crypto tax enforcement are not unique to Canada but are amplified by the technology’s borderless nature. The CRA’s strategy, including data requests from entities like Dapper Labs, sets a precedent for international peers. As awareness grows, voluntary compliance could alleviate audit pressures and foster a stable environment for innovation.

Experts in tax policy, such as those cited in federal court filings, stress the need for enhanced technological tools to track transactions. This could include better integration of blockchain analytics into routine audits. Until such advancements, the current framework relies on dedicated personnel and legal mechanisms to uphold regulations.

The absence of criminal charges does not diminish the CRA’s impact; civil recoveries demonstrate tangible results. With $100 million reclaimed, the program validates the value of specialized crypto audits. Moving forward, increased funding and expertise could accelerate progress against evasion.

For cryptocurrency enthusiasts and investors, these insights serve as a reminder of the regulatory landscape. Maintaining detailed records of transactions and consulting tax professionals ensures alignment with CRA guidelines. This proactive approach not only avoids penalties but also supports the legitimacy of the crypto market.