UK tax watchdog makes first seizure over $2 mn NFT fraud: BBC | Tech News

UK tax watchdog makes first seizure over $2 mn NFT fraud: BBC

The UK's tax watchdog seized three nonfungible tokens (NFT) as part of a suspected case of value-added tax fraud worth £1.4 million ($1.9 million), the BBC reported.

By:BLOOMBERG
| Updated on: Aug 22 2022, 10:11 IST
NFTs gained widespread popularity among crypto traders and art aficionados alike last year. 
NFTs gained widespread popularity among crypto traders and art aficionados alike last year.  (AFP)

The UK's tax watchdog seized three nonfungible tokens as part of a suspected case of value-added tax fraud worth £1.4 million ($1.9 million), the BBC reported. Her Majesty's Revenue and Customs said it was the first time that U.K. law enforcement had seized an NFT, a type of digital asset that can be traded over blockchain networks, according to the report. Three people have been arrested on suspicion of attempting to defraud the authority allegedly using a web of 250 fake companies, the BBC said on Monday, citing HMRC.

NFTs 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 of about $16 billion, an analysis of NFTGo data by crypto research firm Messari showed this month.

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The tokens, which symbolize ownership of a digital artifact like music or an image, are typically bought and sold using the cryptocurrency Ether. The most popular ones take the form of digital avatars that owners can use as their profile picture online, like those featured in collections from the Bored Ape Yacht Club or CryptoPunks. These assets can be worth millions of dollars, and have attracted celebrity attention in recent months from the likes of Paris Hilton, Reese Witherspoon and Serena Williams.

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HMRC didn't immediately respond to requests for comment. 

The suspected fraudsters utilized “sophisticated methods” such as fake and stolen identities, false addresses and invoices and operating over hidden private networks to obfuscate their activities, the report cited HMRC as saying.

The NFTs have yet to be valued. Authorities also seized other crypto assets worth some £5,000, according to the BBC.  

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First Published Date: 15 Feb, 11:49 IST
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