If you sell Bitcoin for Fiat, then you have to pay taxes.
While Bitcoin is a currency, it is considered a commodity and therefore by selling it you're 'making money'.
It's illegal if you don't pay taxes.
Taxes need to be paid in any case. You in everything are right. It would be desirable to add that it is better to pay, than to hide.
Those taxes that government can justify are bound to be paid but those which are absurd and also not used for the welfare of public, why to pay those taxes. Just because of these taxes, people are highly attracted towards crypto currencies. No one is there to charge them any shitty tax in the crypto kingdom.
I also think the tax must be paid unconditionally. Taxes are the requirements coming from legit power of a country or state. So wtihout tax, we can't prove that our income is legit. Othwerwise, they could have said it's a crime sourced money.