This research examines the complex relationship between investor behaviour, social media influence, and crypto tax non-compliance within the evolving Indian regulatory framework governing virtual digital assets (VDAs). The rapid expansion of cryptocurrency participation in India, driven primarily by retail investors and digital trading platforms, has created significant compliance challenges for tax authorities despite the introduction of a specialised taxation regime under the Finance Act, 2022. The study analyses how behavioural finance factors such as herd mentality, overconfidence bias, loss aversion, and mental accounting shape investor decision-making patterns in highly volatile crypto markets and indirectly contribute to under-reporting or misreporting of taxable gains. The research further explores the role of social media ecosystems and finfluencers in constructing informal narratives that normalize speculative trading, downplay regulatory risks, and foster misconceptions regarding tax obligations. Algorithm-driven content amplification, targeted digital persuasion, and monetized influencer networks are shown to significantly affect investor perceptions of compliance costs and detection probabilities. The study situates these behavioural and technological dynamics within India’s broader legal architecture, including provisions of the Income-tax Act, 1961, the Prevention of Money Laundering Act, 2002, SEBI regulatory initiatives, and intermediary liability norms under information technology law.