UK taxmen seize NFTs for 1st time in $1.9 mn fraud case

London, In a first, the UK tax authority has seized three Non-Fungible Tokens (NFT) as part of a probe into 1.4 million pounds (roughly $1.9 million) fraud case, the BBC reported on Monday.

The authority said it was the first UK law enforcement to seize an NFT.

Her Majesty’s Revenue and Customs (HMRC) also seized 5,000 pounds worth of crypto assets ($6,762) alongside three NFT artworks, which have yet to be valued.

HMRC said the suspects 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 first seizure of an NFT “serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC,” said Nick Sharp, 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.”

The suspected fraud is alleged to have involved 250 fake companies, and the three suspects apparently used everything from fake addresses, pre-paid phones, VPNs, and stolen identities to hide their activities from HMRC.

Sky News reports that HMRC has not taken control of the NFTs, but is using a court order to prevent them from being sold.

An NFT is a non-interchangeable unit of data stored on a Blockchain, which can be owned and traded as digital items, such as videos or clothing for avatars.

After serious concerns were raised on cryptocurrencies and their misuse for money laundering and hawala-based transactions by terror groups and criminals, a report recently claimed that money laundering through the buying and selling of non-fungible tokens (NFTs) is becoming a growing sector.

According to a report by Blockchain data platform Chainalysis, they found a small but growing portion of activity on NFT marketplaces that could be attributed to money laundering.

“While money laundering in physical art is difficult to quantify, we can make more reliable estimates of NFT-based money laundering thanks to the inherent transparency of the Blockchain,” the report said.