NFTs seized by UK tax authorities for the first time

Tech

Britain’s tax authorities, Her Majesty’s Revenue and Customs (HMRC), say it is the first authority in the country to seize an NFT. BBC news reports. The seizure was part of a £1.4 million (about $1.9 million) fraud case in which three people have been arrested. The authority seized £5,000 worth of crypto assets (about $6,762) in addition to three NFT artworks that have yet to be valued.

As cryptocurrencies have exploded in price, high profile seizures by authorities have become more and more common. This month, the US Department of Justice seized $3.6 billion worth of cryptocurrency related to the 2016 Bitfinex hack. But this is one of the first high-profile seizures of NFTs, digital assets that attempt to serve as proof of ownership. from media such as pictures or songs.

According to HMRC’s deputy director of economic crime, Nick Sharp, “the authority is constantly adapting”[s] to new technology to ensure we keep up with how criminals and evaders try to hide their assets.” He told BBC news the seizure “serves as a warning to anyone who thinks they can use crypto assets to hide funds from HMRC.”

The suspected fraud allegedly involved 250 bogus companies, and the three suspects apparently used everything from fake addresses, prepaid 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.

This probably won’t be the last time we hear about authorities seizing NFTs. Recently, an IRS special agent noted that the agency is increasingly targeting crypto assets due to the “mountains” of fraud it sees in the area. Bloomberg Quinto reported. With individual NFTs selling for millions as part of an industry worth about $16 billion, it is inevitable that authorities will become more involved.

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