Numerous cryptocurrency investors in Japan have underreported their taxes, owing up to 1.4 billion yen (approximately $12.6 million).
Unaccounted gains are associated with ADA, the native token of the Cardano blockchain and the world’s third-largest cryptocurrency with a market capitalization of more than $70 billion.
According to one of those involved in the audits, many investors in the Kanto region, which includes the Greater Tokyo Area, as well as the cities of Saitama, Tochigi, Gunma, Niigata, and Nagano, benefited specifically from the ADA price rally in 2021.
Cardano’s rally is said to have accounted for $6 million of the total undisclosed taxes.
Since the beginning of the year, the value of ADA has increased by over 1,100%, reaching an all-time high above $3 at the beginning of September.
Since then, the asset’s price has been mostly in decline, with ADA trading hands at $2.19 at the time of writing, according to CoinGecko.
Cardano, also known as “Japanese Ethereum,” held an initial coin offering (ICO) between 2015 and 2017, with a primary focus on Asian markets.
Cardano and cryptocurrency are ‘legally gray.’
Despite the high level of interest, ADA was only made available for trading in Japan in August of this year, with Bitpoint becoming the first local exchange to overcome strict regulatory hurdles and list the asset.
Previously, Japanese investors could only trade ADA on foreign exchanges like Binance, Kraken, or Bittrex.
Concerning the unreported gains, Japanese tax collectors told Nikkei that because digital assets are “legally gray,” traders are increasingly using crypto investments as a “tax-saving measure.”
According to a source close to the audit, crypto investors were either not declaring their profits or were evading taxes on purpose.