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NFTs Seized by HMRC for the First Time
Three non-fungible tokens were seized as part of a VAT fraud case.
For the first time, HM Revenue and Customs (HMRC) has seized NFTs as part of an investigation into suspected VAT fraud.
As well as the seizure, three people have been arrested, accused of trying to defraud HMRC of £1.2 million through an alleged 250 fake companies.
Nick Sharp, deputy director economic crime, said the first seizure of an NFT “serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC.”
He added: “We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”
HMRC said the suspects in its fraud case were alleged to have used “sophisticated methods” to try to hide their identities including false and stolen identities, false addresses, pre-paid unregistered mobile phones, Virtual Private Networks (VPNs), false invoices and pretending to engage in legitimate business activities.
The three digital artworks seized have not been valued, though the HMRC also acquired £5,000 worth of crypto-assets through a court order.
NFTs are digital assets – or more specifically, unique digital certificates that show you own something – bought and sold through smart contracts on platforms leveraging the blockchain.
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Many have touted it as being to art collection what Bitcoin is to finance management. However, detractors claim they’re a bubble waiting to be burst.
Essentially, anybody can ‘tokenise’ an asset to sell as an NFT, with interest in the practice being fuelled by recent high-profile sales.
An image of a popular internet meme, featuring a two-year-old girl, was sold as a NFT for about $74,000 (£54,000) in September last year as well as an NFT of Twitter-creator Jack Dorsey’s first Tweet selling for $2.5 million.
Cryptocurrency and crypto assets are being leveraged more and more for illicit activities, such as money laundering. Last week, $5 billion worth of Bitcoin was recovered as hackers attempted to launder money obtained through a 2016 heist of Bitfinex.
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