That's a strange reasoning - if I wire money back and forth between my two bank accounts, these transfers cannot be a subject of taxation. Similarly, moving crypto from one wallet to another is merely a transfer. You don't trade one for another or anything.
I am sure you've discussed it with lawyers and accountants, as we're not talking pennies here, but still. Not really in line with the common sense.
I thought the same thing. From what I understand, this rule is applied when someone isn't technically "cashing out," but the tax authorities still view it as a taxable event.
To be honest, thinking about this still makes me feel physically ill. I guess I haven't fully processed everything that happened.
I feel for you mate :/