UK tax authority seizes NFTs to investigate VAT fraud scheme

In a first, the UK’s tax authority, Her Majesty’s Revenue and Customs (HMRC), has seized three non-fungible tokens amid an ongoing investigation related to suspected tax fraud. Per the reports revealed today, this is the first time a UK law enforcement agency has seized NFTs.

The confiscation of NFTs is part of a larger ongoing probe involving a £1.4 million ( $1.9 million) VAT fraud case. The authorities have also arrested three people allegedly using “sophisticated methods” to hide their identities and pretending to engage in legitimate businesses, BBC reported Monday.

Nick Sharp, HMRC’s deputy director of economic crime, said in a statement:

“Our first seizure of a Non-Fungible Token serves as a warning to anyone who thinks they can use cryptoassets to hide money from HMRC. We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”

In addition to the NFTs, the authorities have also confiscated £5,000 ($6,762) worth of crypto assets. The case is said to involve more than 250 fake companies as a way to evade taxes worth $1.9 million. Meanwhile, details of the digital collectibles and crypto assets have not been made available.

While NFTs have seen exploding popularity in the past year, money laundering and wash trading via the same is increasingly becoming widespread as well, per a report by blockchain analytics firm Chainalysis.

According to the firm, criminals have made nearly $8.9 million from wash trading of NFTs. It also tracked NFTs worth $2.4 million sent from wallet addresses associated with illicit activity.

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