HMRC makes first seizure of non-fungible tokens in VAT fraud investigation
Tax agency becomes first public authority to seize digital tokens
Credit: Pete Linforth/Pixabay
HM Revenue and Customs has seized three non-fungible tokens (NFTs) as part of an investigation into suspected VAT fraud.
The department said three people had been arrested on suspicion of attempting to defraud it of £1.4m. HMRC claimed that it has become the first public authority or law-enforcement agency to seize NFTs as part of an investigation.
NFTs are digital tokens with a unique digital signature which can be bought and sold using traditional currency or cryptocurrencies, such as Bitcoin.
According to HMRC, the suspects used “sophisticated methods” to hide their identities, including false and stolen identification, fake addresses, pre-paid unregistered mobile phones, and virtual-private networks technology.
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Nick Sharp, deputy director economic crime at HMRC, said the seizures of the NFTs, which had not yet been valued, served as a warning to anyone who thought they could use crypto assets to hide money.
“We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets,” he said.
NFTs typically relate to files such as photos, videos or audio and have been used as a means of buying and selling art in the digital world.
However, while the NFT is intended to convey ownership and copyright of the files in question, it does not prevent them being freely and legally shared and copied online, leading many to question their value.
One of the more eye-catching examples is the sale of the NFT for the first tweet ever posted on Twitter, by the site’s founder, Jack Dorsey.
The tweet-as-NFT was bought for $2.9m; it remains freely available to view online – and to embed in news articles (see below).
just setting up my twttr— jack⚡️ (@jack) March 21, 2006
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