UK tax watchdog seizes the first-ever NFTs in $1.9mn fraud probe

February 16, 2022

By Tiasha Chatterjee

The UK tax authority has seized three NFT (NON-Fungible Tokens) as a part of an investigation that suspected a VAT (value-added tax) fraud involving 250 alleged faked organizations, making it the first-ever domestic enforcement to seize an NFT.

Here’s what we know so far:

  • HMRC or Her Majesty’s Revenue and Customs reported that three people have been arrested under the suspicion of trying to defraud the authority of 1.4 million pounds (USD 1.9 million), Aljazeera reported. The authorities also had to seize other crypto assets which amounted up to about 5,000 pounds, while the NFTs themselves have not yet been valued.
  • “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,” reported Nick Sharp, HMRC’s Deputy Director of Economic Crime. “We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”
  • The suspected fraudsters have been allegedly using sophisticated methods to hide their identities, including stolen and false identities, Virtual Private Networks (VPNs), false addresses, pre-paid unregistered mobile phones, fake invoices, and putting up an act of engaging in legitimate business actions.
  • The rise of NFT sales surpassed USD 4 billion in 2021, which also exposed it to a wide variety of scams, making regulators question whether NFTs should be considered digital assets at all.
  • “Although NFTs certainly challenge traditional notions of possession and ownership, the actions of HMRC show that our current legal framework is able to facilitate and support the ongoing development of digital ownership rights,” said Robin Henry, partner at Collyer Bristow LLP.
  • He further said that HRMC did not physically take-up the NFTs in question, but had to put a court order on it, which prevents the NFTs from being sold on the marketplace.

 


About the author

Tiasha Chatterjee is a content writer with a great curiosity to learn about new things. Combining this curiosity with her interest in the English language, she loves to write about different subjects, including blockchain. When not writing, you’ll find her surrounded by her cats, soaking up another book.

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