VANCOUVER — The Canada Revenue Agency's team of “crypto asset auditors” has been investigating a rich seam of unpaid taxes, working on more than 200 files and collecting more than $100 million over the past three years.
Although the agency says that up to 40 percent of taxpayers using crypto-asset platforms have either failed to file a tax return or are at high risk of non-compliance, no criminal charges have been filed since 2020.
Court documents involving a Vancouver-based cryptocurrency firm suggest that the federal government's efforts to curb tax evasion and illicit financing through cryptocurrencies are hampered by limited enforcement resources in a space marked by its limitless anonymity.
The CRA said in a statement filed in Federal Court in September that Canada's Minister of National Revenue is concerned that taxpayers are using an anonymous shadow economy to evade taxes, fueled by cryptocurrencies and non-fungible tokens, which are the digital representation of an asset.
However, the agency's chief crypto auditor says in related filings that the CRA believes “there is no way to reliably identify taxpayers operating in the crypto space and assess compliance” with income tax reporting obligations.
The CRA has applied to the Federal Court to seek an order to expose thousands of customers of Dapper Labs Inc., a “leading company” in the non-fungible token space that also operates its own blockchain and its own line of crypto wallets for storing digital assets.
The company did not object to the investigation, but documents show the CRA initially sought information on Dapper's top 18,000 users, but discussions with company officials and its lawyers ultimately led to that number being cut to 2,500 users.
This is only the second time the court has ordered the disclosure of clients of a Canadian cryptocurrency firm in an investigation to identify possible tax evaders, which is known as an “unnamed persons requirement” in the Income Tax Act.
An affidavit from Predrag Mizdrak, a project manager in the agency's Digital Compliance and Audit Support Division, said the cryptoasset industry is dominated by the underground economy.
Mizdrak said in an affidavit that the agency's compliance efforts targeting crypto platforms to date “indicate significant non-compliance in this area.”
It said previous data shows that approximately 15 per cent of Canadian taxpayers using crypto asset platforms “failed to file a tax return on time or at all.”
The agency says 30 percent of tax filers are “categorized as at high risk of non-compliance.”
“During the COVID-19 pandemic, the use of cryptoassets has increased significantly,” Mizdrak said in an affidavit.
“This has created additional compliance challenges for the CRA due to the built-in anonymity in the crypto space, the volume of transactions, and the ease of setting up accounts on many crypto asset platforms overseas.”
In an emailed statement, the agency said its crypto-asset program has 35 auditors working on more than 230 files and receiving “significant tax revenues from audits,” including $100 million over the last three years.
It said five criminal investigations related to the “digital asset component” were opened between 2020 and the first quarter of 2025, four of which were ongoing as of March, but no charges had been filed.
“Criminal investigations conducted by the CRA are complex and often take years to complete,” the agency said.
“The length of the investigation will depend on the complexity, the number of individuals involved, the availability of evidence, international requests for assistance and the level of cooperation of witnesses to determine the validity of criminal charges.”
Neither Dapper Labs nor its lawyers responded to requests for comment.
The companies subject to the unnamed claims are not accused of wrongdoing and will only be approved by the court if they are part of an “identifiable” group and are being used by the CRA to check tax compliance.
Meanwhile, Canada's anti-money laundering agency FINTRAC this year imposed hefty fines on crypto firms for failing to comply with the country's Proceeds of Crime (Money Laundering) and Terrorist Financing Act.
In October, FINTRAC announced a record fine of nearly $177 million against Xeltox Enterprises Ltd., which is registered as operating out of a mailbox rental business in Vancouver.
It also fined Seychelles-based cryptocurrency exchange Peken Global Ltd., operating as KuCoin, more than $19.5 million for failing to register as a foreign money services company in September.
Neither Xeltox nor Kucoin have branches or employees in Canada, but both companies have hired Canadian lawyers to fight the fines in Federal Court.
Without borders, but not without law
Jessica Davis, president of Insight Threat Intelligence, is a illicit finance expert who once worked for FINTRAC and the Canadian Security Intelligence Service.
She said the $100 million resulting from the cryptocurrency-related audit was “pretty significant.”
Davis said she was surprised that no criminal charges had been filed yet as cryptoassets have been around for many years, but it took time for awareness to reach the “mainstream”.
“I think people still don't fully understand that profits made from cryptocurrency are actually taxable, which is kind of funny,” she said. “I think people for a long time thought they were outside the box, which obviously isn’t true.”
She said Canada is doing “very well” on the regulatory front, and while the space is borderless, it is not “lawless.”
“Where we have more problems is with enforcement. That is, actually continuing to investigate financial crimes, actually bringing those charges and demonstrating the effectiveness of our regime.”
She said the RCMP's federal and contract policing model meant resources to investigate financial crimes could be “spent on supporting other investigations.”
“I would probably say that Canadians are much less concerned about financial crime than they are about other things, whether that's fair or not. And I would also say that politically the RCMP and other law enforcement agencies in Canada have not been required to actually show results on financial crime,” she said.
This year's budget does include a provision to create a Canadian financial crimes agency by spring 2026, but Davis said details of its mandate and structure remain unclear.
“It's been on different budgets and different iterations,” she said. “So I think this time I'm a little, maybe I'll say cautiously optimistic, but I'm going to wait and see what happens before I spend too much energy thinking about it.”
A federal court granted the CRA's unnamed parties request against Dapper Labs in September, nearly five years after it issued such a request to Toronto-based Coinsquare Ltd.
“CRA continues to address non-compliance by taxpayers/registrants identified during this UPR; therefore, we cannot provide a definitive estimate of the number or value of the resulting revaluations,” the agency said.
Finance Minister Francois-Philippe Champagne announced in October that the new financial crimes agency would “investigate complex cases of money laundering, organized criminal activity and online financial fraud.”
The agency, Treasury Canada said, will be “Canada's first organization dedicated to investigating complex financial crimes and recovering illicit proceeds from criminals.”
This report by The Canadian Press was first published Dec. 7, 2025.
