UK tax authourities seize NFTs in fraud investigation for the first time

UK’s tax, payments and customs authority Her Majesty’s Revenue & Customs (HMRC) has reportedly arrested three accused in a $2 million non-fungible tokens (NFTs) fraud case. The agency has also seized three NFTs and cryptocurrencies worth 5,000 pounds. 

The case allegedly involves 250 shell companies that defrauded the public of around 1.4 million pounds ($1.9 million), a media report said. 

The NFTs use blockchain-based technology to signify the ownership of a digital item. Likewise, HMRC is responsible for collecting taxes, paying child benefits, enforcing tax and customs laws, and enforcing the payment of minimum wage by employers in the UK. 

Nick Sharp, HMRC’s Deputy Director Economic Crime, in a statement, said, “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.”

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“We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”  

Media reports have claimed the perpetrators allegedly attempted to claim back more value-added tax (VAT) than what they were owed. As per HMRC, the suspects, who pretended to engage in legitimate business activities, leveraged on ‘sophisticated methods’ to hide their identities, including using stolen IDs, fake addresses, prepaid unregistered mobile phones, virtual private networks (VPNs), and phoney invoices.