Taxman seizes three NFTs amid growing fraud concerns
The UK tax authority has made its first ever seizure of non-fungible tokens (NFTs) amid fears criminals are concealing wealth using digital assets.
HMRC has seized three NFTs and arrested three people as part of an investigation into a suspected attempt to defraud the tax authority of £1.4m.
The suspects allegedly used “sophisticated methods” to conceal 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 as part of the fraud which involved 250 fake companies. In addition to the NFTs HMRC took control of £5,000 worth crypto assets.
“Our first seizure of a Non-Fungible Token serves as a warning to anyone who thinks they can use cryptoassets to hide money from HMRC,” said Nick Sharp, the deputy director for economic crime at HMRC.
“We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets,” Sharp added.
It comes amid an explosion of interest in NFTs, with the asset class growing into a $40bn market last year. The tokens represent digital and physical assets which can include anything from artwork to objects and music. The growth of the new asset class has also opened up new avenues for criminals looking to hide their money to avoid tax.
Commenting on the seizure of crypto assets by HMRC, former senior Civil Servant Sir Edward Troup said, “first of all, I’m happy to read that HMRC are doing their job. That’s what they are there for.”
“The ability to hide assets away either for tax fraud or money laundering is not new,” Troup continued in comments to the BBC’s Today Programme. “But inevitably HMRC is always chasing market developments. So it’s really good to read that they’re catching up.”
“These are particularly challenging assets,” he added. “But, you know, I’m sure that 100 years ago, finding where the cash buried in the garden was as difficult as it is now proving to be to track NFTs.”
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