Canada targets Dapper Labs users in second-ever crypto tax probe as enforcement gap widens: report
Canada's tax authority has collected more than $100 million CAD (roughly $72 million USD) from crypto-related audits over the past three years, but has failed to bring any criminal charges since 2020, according to court filings obtained by The Canadian Press that reveal structural limitations in the country's enforcement capabilities.The CRA's 35-person crypto audit team has worked on over 230 files and estimates that 40% of taxpayers using crypto platforms have either failed to file taxes or are at high risk of non-compliance, according to the report. Yet the agency's own top crypto auditor acknowledged in a sworn affidavit that the CRA believes "there is no way to reliably identify taxpayers operating in the crypto space and assess compliance" with income tax obligations.Furthermore, the CRA has obtained a court order for data on 2,500 users from Dapper Labs, the NFT firm behind NBA Top Shot and CryptoKitties, through a court order, the report states. The CRA initially sought information on Dapper's top 18,000 users, but settled for 2,500 following negotiations with Dapper's company officials and lawyers.The CRA's September Federal Court application marked only the second time a court has ordered such a disclosure from a Canadian crypto firm, following a similar order issued to Toronto-based exchange Coinsquare in 2020. Dapper Labs did not immediately respond to a request for further comment from The Block. Though the CRA's push into crypto has been effective from a monetary standpoint, enforcement remains difficult. While the CRA has initiated five criminal investigations with a "digital asset component" since 2020, four remain ongoing with no charges filed. The agency attributed the delays to the complexity of cases involving cross-border activity, limited evidence availability, and the need for international cooperation, per the report. "The CRA’s criminal investigations are complex and often require years to complete," the agency told The Canadian Press. "The length of time required to investigate will be dependent on the complexity, number of individuals involved, availability of evidence, international requests for assistance, and level of co-operation of witnesses with a view to determine whether criminal charges are warranted."The enforcement gap comes as Canada advances new stablecoin legislation and prepares to launch a dedicated financial crimes agency by spring 2026. Finance Minister François-Philippe Champagne announced in October that the new agency would be "Canada's first-ever organization dedicated to investigating sophisticated financial crimes and recovering illicit proceeds from criminals."Meanwhile, FINTRAC, the country's anti-money laundering agency, has been more active on that front, fining exchange Cryptomus a record C$176.96 million ($126.2 million USD) for anti-money laundering and sanctions evasion in October, and levying a C$19.5 million ($14.1 million) administrative monetary penalty on international crypto exchange KuCoin on similar counts in late September. KuCoin is appealing the penalty in Canadian court. FINTRAC also fined Binance C$6 million ($4.2 million USD) in May of last year. Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block. Foresight Ventures invests in other companies in the crypto space. Crypto exchange Bitget is an anchor LP for Foresight Ventures. The Block continues to operate independently to deliver objective, impactful, and timely information about the crypto industry. Here are our current financial disclosures.© 2025 The Block. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.