UK’s Tax Authorities Seize NFTs For First Time In A £1.4m Fraud Case

The UK tax office has seized three Non-Fungible Tokens (NFT) as part of an investigation into an alleged VAT fraud involving 250 fictitious companies.

According to HMRC, three people have been arrested on suspicion of attempting to defraud HMRC of £1.4 million.

According to the authority, it was the first law enforcement agency in the UK to seize an NFT.

NFTs are digital assets that may be purchased and traded but do not have their own physical form.

Digital tokens are certificates of ownership for virtual or physical things that were first introduced in 2014. NFTs have a unique digital signature that allows them to be purchased and sold using either regular currency or cryptocurrencies like Bitcoin.

NFTs have been hailed as a digital replacement to collectibles, similar to how Bitcoin was hailed as a digital alternative to cash, but many doubters feel they are a bubble waiting to burst.

False and stolen identities, false addresses, pre-paid unregistered mobile phones, Virtual Private Networks (VPNs), false invoices, fake invoices, and pretending to be engaged in legitimate business activities are among the “sophisticated methods” allegedly used by those suspected of committing the fraud, according to HMRC.

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

“We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”

HMRC announced that it has acquired a court order to retain the confiscated crypto assets, valued at roughly £5,000, and three digital artwork NFTs, which have not been valued, in custody while the investigation proceeds.

Paintings, for example, are prized because they are one-of-a-kind, whereas digital files can be easily and indefinitely copied.

NFTs can be used to “tokenize” artwork, resulting in a digital certificate of ownership that can be bought and sold. The tokens can be used to represent a wide range of real-world objects, such as art, music, and movies.

A shared ledger known as the blockchain keeps track of who owns what, analogous to crypto-currency.

It is impossible to falsify records because the ledger is maintained by thousands of computers from across the world.

An NFT of a popular online meme featuring two-year-old Chloe Clem was sold for $74,000 in September of last year.

(Adapted from BBC.com)



Categories: Economy & Finance, Regulations & Legal, Strategy, Sustainability, Uncategorized

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