The tax agency in the United Kingdom has taken three non-fungible tokens, according to what is believed to be the first seizure of NFTs by a UK law enforcement agency.
Her Majesty’s Revenue and Customs has announced the seizure of NFTs during an investigation into a £1.4 million ($1.9 million) suspected VAT fraud case. Three people have been arrested on suspicion of attempting to defraud the taxman.
The suspects attempted to reclaim more VAT than they were owed, utilizing a variety of stolen identities, unregistered phones, and fraudulent invoices to hide their identities. According to HMRC, 250 fraudulent firms were included in the scheme.
“Our first seizure of a Non-Fungible Token serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC,” The HMRC’s Deputy Director of Economic Crime, Nick Sharp, said in a statement Monday.
“We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets,” Sharp said.
Non-fungible tokens (NFTs) are unique digital assets developed to track ownership of virtual things, such as a work of art or video game character, on the blockchain. Blockchains are digital ledger technologies that underlie most major cryptocurrencies.
The demand for NFTs has increased dramatically in recent years, with sales of such tokens reaching $40 billion by 2021. The market, however, is vulnerable to robberies and scams, and there are concerns that a large proportion of trading activity in NFTs has been driven by fraudulent practices like wash trading.
The HMRC is the first law enforcement organization in the United Kingdom to seize NFTs, according to the organization. Authorities seized three NFTs representing digital art and another £5,000 in cryptocurrency assets, which they characterized as “the fruits of illegal activity.” The NFTs are still under evaluation, and the investigation is ongoing, according to HMRC.
It’s just a week after the revelation that the United States has seized more than $3.6 billion in allegedly stolen bitcoins linked to the 2016 hacking of cryptocurrency exchange Bitfinex.
The seizure of the NFT appears to confirm that criminals are investing in digital assets. “can’t hide in the world of crypto.”
“Enforcement agencies can track and trace criminals’ transactions, and seize NFTs and crypto assets used in illicit activity, robbing criminals of their profits,” he said in an emailed comment Monday.