Crypto Audits Rake in $100M for CRA While Criminal Cases Stall
The taxman's crypto crackdown is paying off—big time. While complex criminal prosecutions crawl through the courts, straightforward audits are delivering a windfall straight to government coffers.
Audits: The Low-Hanging Fruit
Forget the dramatic courtroom battles. The real action is in the audit office. The Canada Revenue Agency has perfected the art of following the digital money trail, targeting discrepancies and undeclared gains with surgical precision. It's a numbers game, and right now, the house is winning.
The $100 Million Reality Check
That eye-popping figure isn't from busting a shadowy syndicate. It's the cumulative result of thousands of individual examinations, each one adding another brick to a $100 million wall of reclaimed revenue. It turns out enforcing existing rules can be just as profitable as chasing headlines.
Justice Moves at a Different Speed
Contrast that with the glacial pace of criminal proceedings. Building a court-ready case for fraud or market manipulation involves a labyrinth of digital forensics, jurisdictional hurdles, and legal wrangling that can take years. In the meantime, the audit division isn't waiting for a verdict to balance its books.
A Cynical Take on Compliance
It's the oldest play in the finance book: it's not about the crime, it's about the fine. The system often finds it more efficient to monetize non-compliance through penalties and back taxes than to secure a conviction. Consider it a brutally efficient, if uninspiring, revenue stream.
The bottom line? Regulatory scrutiny is becoming a core cost of doing business in crypto. While the flashy court cases capture imaginations, the steady drip of audit assessments is what's really reshaping the landscape—and padding government budgets.
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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