UK tax watchdog seizes NFTs in $1.9 million fraud casewritten by Bella Palmer
Three people have been arrested on suspicion of attempting to defraud the authority, allegedly using a web of 250 fake companies, HMRC said
The U.K.’s tax watchdog seized three nonfungible tokens as part of a suspected case of value-added tax fraud worth 1.4 million pounds ($1.9 million), in the first ever domestic enforcement action of this kind.
Three people have been arrested on suspicion of attempting to defraud the authority, allegedly using a web of 250 fake companies, HMRC said. Authorities also seized other crypto assets worth about 5,000 pounds ($6,806), while the NFTs have yet to be valued.
NFTs, a type of digital asset that can be traded over blockchain networks, gained widespread popularity among crypto traders and art aficionados alike last year, even breaking their way into top auction houses such as Christie’s and Sotheby’s with multimillion-dollar sales. The market is worth a total of about $16 billion, an analysis of NFTGo data by crypto research firm Messari showed this month.
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, said Nick Sharp, HMRC’s Deputy Director Economic Crime. We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.
This case demonstrates yet again that criminals can’t hide in the world of crypto, said David Carlisle, Head of Policy & Regulatory Affairs at crypto research firm Elliptic. Enforcement agencies are able to track and trace criminals’ transactions, and seize NFTs and cryptoassets used in illicit activity, robbing criminals of their profits.
The suspected fraudsters are alleged to have used sophisticated methods to try and 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, HMRC said.
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