Do you need to pay taxes on cryptocurrency trading?

I received a voice message from a childhood friend late at night, and we talked for 90 minutes. He is doing business in Guangzhou and straightforwardly said his main business is cryptocurrency trading, while his side business is e-commerce. The e-commerce business hardly makes money, so the main business has become a side business. Over the years, most of his income has come from profits made through cryptocurrency trading. In the past few years, the funds have been moving through various exchanges and trades. When making money, he would withdraw it, but now it’s hard to find the trading records. Now he doesn’t know who reported him for tax issues, and he and his wife have over 10 million in their accounts, which they estimate will be completely fined, otherwise they say he might go to jail.

How should this matter be handled? Is it true? Do you need to pay taxes on cryptocurrency trading? Which regulation explicitly states this?

Late at night, I didn’t realize it, but today when I woke up, I felt that this matter seems like a bomb💣 for those in the industry. Is there anyone knowledgeable who can explain?