Case Study –  How MetaCounts helped a crypto investor deal with complex crypto portfolio tax problem

In this case study we discuss how we successfully addressed a high-net-worth investor's intricate crypto portfolio tax challenge. The case study outlines the challenges, innovative solutions, and outstanding outcomes that establish MetaCounts as a leader in navigating complex crypto landscapes
Case Study by
Nitin Ashok, CPA, CFA
March 13, 2024 7:22 AM
10 Min Read.
Case Study –  How MetaCounts helped a crypto investor deal with complex crypto portfolio tax problem
Table of Contents

    Client Background

    The client is a high-net-worth individual, a trailblazer in the crypto space, and a prominent figure in the crypto industry. He possesses a multimillion-dollar crypto portfolio with transactions spanning multiple chains and wallets, involving activities in DeFi, ICOs, mining, and more. The client entered the crypto world in 2016 and had not reported any crypto-related information in his tax returns since then, resulting in millions in unreported income and capital gains/losses.

    In an attempt to rectify this situation, the client previously collaborated with another accounting firm to report some crypto taxes for 2021, leading to a Notice of Assessment indicating a tax payable of $2.1 million. Upon reviewing the filings, it became evident to us that there were a lot of anomalies. The previous firm calculated capital gains and income amounts without proper tracking of the cost basis. Consequently, tax authorities were mailing the client to settle the outstanding tax liability based on these filings. Furthermore, no foreign holdings forms (T1135s) were filed, carrying significant tax consequences and penalties. After unsuccessful attempts to resolve the situation with the previous firm, the client sought assistance from MetaCounts.

    Portfolio Details

    Client's crypto portfolio comprised 200 wallets and an impressive 500,000 plus transactions across various chains. There were transactions on well-known exchanges, including but not limited to BHEX, Bibox, Biki, Bilaxy, Binance, Bitfinex, Bithumb Global, BitMax, BitMEX, Bittrex, BKEX, Bybit, C2CX, CITEX, CoinEx, Coinsquare, Coinsuper, CoinTiger,, Cryptopia, FTX, HitBTC, Hoo, Hotbit, Huobi, Kraken, Kucoin, Livecoin, Mercatox, MEXC, OKX, Poloniex, qTrade, QuadrigaCX, etc.

    In the realm of decentralized finance (DeFi), Client has explored a diverse range of protocols, engaging in staking, liquidity pools (LPs), liquid staking, and, notably, ventures into projects like OHM, TIME, MEMO, and their equivalents, particularly during 2020-21. While the predominant focus was on strategies involving borrowing and lending on platforms like Aave and Compound, such activities represented a small fraction of their overall DeFi strategies undertaken. Client had participated in over 40 Initial Coin Offerings (ICOs), showcasing a strategic approach to early-stage investments in the crypto market.

    Challenges and Solutions

    Data Labyrinth

    Challenge: The high transaction volume, incidents of Rug pulls, lost exchanges, and incomplete histories created a labyrinth of data complexities.

    Solution: MetaCounts had to employ ingenious strategies to reconstruct missing data, ensuring a thorough reconciliation that addressed every nuance of the client's crypto dealings. We orchestrated a strategic combination of software tools to ensure a comprehensive and accurate reconciliation for the large data set. Here are the software tools we used.

    • Base software: laid the groundwork for reconciling the vast array of transactions. is one of the oldest platform in the market and allows for a lot of customization when working with complex data.
    • Precision Tools: Koinly, Coin tracker, and other platforms were strategically utilized in combination with base software according to their efficacy for different transaction types and data importing needs. Python was used for certain chains to bring data in a software importable format.
    • Collaboration Hub: Google sheets, drop box, Asana and notion became the collaborative epicenter, enabling real-time contributions from multiple team members and client.

    Daily data backups became our armor, shielding against unforeseen challenges. This practice not only secured critical information but also instilled confidence in the reconciliation process.

    Navigating a Multifaceted Crypto Portfolio

    Challenge: Client's multimillion-dollar portfolio sprawled across diverse blockchain networks, involving activities in DeFi, regular trading, ICO investments, rebasing, liquidity pools, and more. The intricate nature of these investments presented a challenge that necessitated a tailored approach.

    Solution: MetaCounts employed bulk classification rules by using different software that had varying capabilities to deal with specific Defi protocols. The result? Automatic transaction classification, saving not just time but ensuring accuracy.

    Race Against Time

    Challenge: We managed to get an extension from tax authority which gave us one month to reconcile over 500,000 transactions. The urgency was palpable.

    Solution: Efficient work planning, meticulous task assignment, and daily updates weren't just strategies but lifelines, ensuring a comprehensive and timely resolution. MetaCounts unleashed a powerhouse of trained resources, harnessing diverse staff for maximum efficiency. MetaCounts unveiled a symphony of tasks and subtasks, expertly assigning them based on individual skills. The process involved constant communications with client in the form of written queries, meetings and phone calls while being mindful of clients time.

    Report Requirements

    Challenge: While crypto tax software provide generic reports, the complexity of client transactions required additional insights. Some tax reports, such as foreign asset holdings and non-arms length transactions demanded manual work.

    Solution: MetaCounts utilized internal models to meticulously craft all custom reports needed by the client, ensuring tailored reports for reporting on tax return.

    Limited Guidance from Tax Authorities

    Challenge: Amidst this complexity, it's crucial to highlight that the transactions the client was involved in had very limited guidance from tax authorities. This added an additional layer of complexity to an already complex problem at hand.

    Solution: Our team consists of professionals with CPA and CFA designations. Hence, we employed a blend of expertise and creativity to interpret and align the client's activities with existing tax regulations, ensuring comprehensive and accurate reporting. The challenge wasn't merely reconciling data; it was navigating uncharted territories within the evolving crypto tax landscape.

    Rebase Transaction Issues

    Challenge: There were hundreds of missing rebasing entries. Rebases are not that common in crypto accounting landscape and there is limited guidance on it from tax authorities. Missing entries on top created additional hurdles.

    Solution: MetaCounts charted the course using Cointracking's transaction flow report, promptly addressing negative token balances which resulted due to missing histories. We passed am adjusting rebasing transaction entry where the token balances were going negative. The result? An audit proof rebases transaction reconciliation.

    Wallet Balance Matching

    Challenge: One of the issues you face almost always after completing reconciliation of crypto portfolios is unmatched wallet balances with actual holdings. This was the case with this client’s portfolio as well.

    Solution: A dedicated team member tracked historical wallet balances as at year end all through the reconciliation process. Token balance checker tools on various explorers were used that ensured accurate year-end balances.

    DeFi Decoding

    Challenge: Untangling the enigma of various DeFi projects. There were many defi projects client invested in such as Wonderland money, OHM, GMX, Dynamic Set Dollar etc.

    Solution: Before starting work, MetaCounts prepared a summary of these projects along with their accounting treatment. This meant we spent less time and maintained efficiency during the engagement. MetaCounts also specializes in Defi projects reconciliation. To this effect, we have created a defi projects guide that you can refer to here.

    OKX Problem

    Challenge: OKX transactions were not recognized by any tax software. Navigating the labyrinth of OKX without software created a lot of issues.

    Solution: We resolved this by manually identifying and crafting a custom CSV for OKX transactions. The result? A bespoke solution for a bespoke challenge.

    ICO Detective

    Challenge: ICOs are always complex and solving their mystery with missing data is always a challenge. The complexity also comes from lag in investment and receipt of tokens as TGE is usually at a later date.

    Solution: MetaCounts unveiled the detective sheet, tracking ICO activities with meticulous detail for timing and vesting cycles based off SAFT agreements.

    Rug Pull Tango

    Challenge: Tangoing through losses due to exploits and lost exchanges is always a challenge.

    Solution: MetaCounts led the tango, tracking down rug pulls and lost exchanges transaction histories for tax benefits. The result – tax losses applied against gains and hence reducing overall tax payable.

    FTX Odyssey

    Challenge: FTX went down leaving investors without access to their accounts. This meant missing transaction history and incomplete data.

    Solution: MetaCounts embarked on the FTX Odyssey, reconstructing history through correlated activities with other wallets. The result? A complete and accurate portrayal of the client's portfolio paving way for future write offs when bankruptcy proceedings are finalized.

    Scam Shield

    Challenge: Shielding against the scam transaction storm. Scam tokens were increasing the value of portfolio significantly with their inflated values as price supplying sources usually show incorrect values for these types of tokens. Identifying and removing these tokens created hiccups during the engagement.

    Solution: MetaCounts raised the shield, identifying wallets with dubious transactions. Advance client confirmation spared us from chasing after worthless tokens.

    Binance Futures Alchemy

    Challenge: Reconciling derivative investments is complex and barely anyone in the industry touches them.

    Solution: MetaCounts is well-versed in the intricacies of futures/margin call transactions. The result? A magical resolution of complexities and an audit proof reconciliation.

    Unknown Horizon

    Challenge: Since client dabbled in crypto for a long period of time, he had forgotten about a lot of transactions. How do we reconcile these transactions?

    Solution: MetaCounts embarked on a journey of rediscovery, holding post-reconciliation discussions with the client. Alternative solutions and assumptions became the compass guiding us in the unknown terrain.

    Gain/Loss Symphony

    Challenge: Harmonizing gain/loss discussions with the client.

    Solution: Crypto tax reconciliations cannot be 100% accurate. Unfortunately that is the nature of the beast that is crypto accounting. With that in mind, we undertook post-reconciliation discussions ensuring alignment with client expectations. Post multiple iterations, we had reports that were very close to actual results and acceptable for tax purposes.

    Superficial Loss Tracking

    Challenge: MetaCounts encountered a significant challenge in tracking superficial losses within the vast landscape of thousands of trades conducted by the client. The intricacies of identifying and managing superficial losses across numerous transactions demanded an innovative and efficient solution to ensure accurate tax reporting and compliance.

    Solution: To address the challenge of tracking superficial losses effectively, MetaCounts implemented a solution leveraging Python scripting and existing software reports. Our expert team crafted a tailored Python script designed to meticulously identify superficial loss trades within the existing trade reports from the software. This automated process not only expedited the identification of superficial losses but also significantly reduced the margin for error compared to manual tracking.

    The Python script seamlessly integrated with MetaCounts' comprehensive tracking and reporting systems, allowing for the swift preparation of adjustment reports. These reports provided a detailed breakdown of superficial losses, offering both transparency and clarity for the client and ensuring accurate adjustments in the tax filing process.

    By employing innovative solutions like the Python script, MetaCounts not only tackled the challenge of superficial loss tracking efficiently but also demonstrated a commitment to utilizing cutting-edge technology to enhance the accuracy and precision of our tax-related services.

    Tax Filing Issues

    MetaCounts undertook a comprehensive journey to address the client's tax filing needs, spanning from 2016 to 2023. The intricate nature of the crypto portfolio required meticulous decision-making on reporting various income streams, capital gains, loss carrybacks, and intricate foreign reporting schedules. Our team, in close collaboration with client lawyers, engaged in continuous dialogue with tax authorities to ensure the accuracy and compliance of each filing.

    Strategic Decision-Making

    Filing adjustments for tax years 2016 to 2021 and preparing tax returns for 2022 and 2023 demanded strategic decision-making. Given the diverse nature of the client's crypto activities, each transaction required careful consideration to accurately reflect its tax implications. Whether it was income from decentralized finance (DeFi), ICO investments, or mining activities, MetaCounts made informed decisions to align with existing tax regulations, ensuring a comprehensive and accurate portrayal of the client's financial activities.

    Voluntary Disclosure Program Utilization

    Recognizing the urgency and complexity of the situation, and considering the client's delayed filings, MetaCounts and client lawyers strategically utilized the Voluntary Disclosure Program. This proactive approach allowed us to report crypto taxes from 2016 to 2021, demonstrating transparency and cooperation with tax authorities. The aim was to mitigate any potential penalties or fines that could arise due to the delayed filings, aligning with the client's commitment to regulatory compliance.

    Collaboration with Legal and Tax Authorities

    Our engagement extended beyond conventional tax filing procedures. MetaCounts maintained consistent communication with client lawyers and tax authorities throughout the process. This collaborative approach ensured that every decision, adjustment, and filing was in accordance with legal requirements and regulatory expectations, creating a transparent and cooperative environment.

    The Results

    MetaCounts orchestrated an extraordinary triumph, unlocking exceptional outcomes:

    • Timely reconciliation of over 500,000 transactions, a testament to our efficiency and commitment.
    • Accurate tracking of historical wallet balances, ensuring a harmonious year-end financial cadence.
    • Profound understanding and adept treatment of diverse DeFi projects, ICOs, and intricate transactions.
    • Successful identification and tracking of rug pull, lost exchanges, and scam transactions, optimizing tax benefits for the client.
    • Expert navigation of complex transaction histories, including OKX and FTX, showcasing MetaCounts' proficiency in unconventional scenarios.
    • Proactive identification and resolution of challenges, demonstrating our meticulous attention to detail.
    • MetaCounts not only provided meticulous tax filing services but also demonstrated an authentic commitment to client advocacy, utilizing strategic programs and collaborating with legal and tax professionals to navigate the complexities of the crypto tax landscape.


    "Working with MetaCounts has been a game-changer for managing my extensive crypto portfolio. Their expertise, attention to detail, and proactive approach set them apart. I've never encountered a team with such depth in crypto accounting" – Danny (Client)
    "Navigating crypto complexities requires a specialized touch. MetaCounts' proficiency in handling intricate scenarios positions them as a top choice for crypto accounting in North America. We are impressed with their depth of knowledge and commitment to delivering exceptional results. We specialize in crypto law and we have never worked with a more experienced crypto accounting team"Client Lawyers


    MetaCounts' extraordinary triumph in this crypto accounting saga solidifies our position as industry leaders. Our ability to handle complex portfolios, and thrive in the ever-evolving crypto landscape is unparalleled. The client's satisfaction, legal professionals' endorsement, and the positive outcomes collectively position MetaCounts as a trusted partner for those navigating the complexities of crypto investments.

    If you’d like to learn more or looking for an expert crypto accounting team, please reach out to us at