U.K. Seizes NFTs in Investigation over Tax Fraud
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U.K. Seizes NFTs in Investigation over Tax Fraud

7 months ago

Officials say the seizures should serve as a "warning to anyone who thinks they can use cryptoassets to hide money."

U.K. Seizes NFTs in Investigation over Tax Fraud

U.K. tax officials have seized non-fungible tokens for the very first time — and fear digital collectibles have given criminals a new way to launder and hide money.

According to The Daily Telegraph, Her Majesty's Revenue and Customs has taken control of three NFTs amid allegations there was an attempt to defraud the taxman out of £1.4m ($1.9m).

Three arrests have been made, and it's claimed the suspects had used "sophisticated" methods to hide themselves — utilizing stolen identities, prepaid cell phones and false addresses.

Officials say the seizures should serve as a "warning to anyone who thinks they can use cryptoassets to hide money." HMRC's deputy director for economic crime told the newspaper:

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

Experts have warned that HMRC is determined to clamp down on tax evasion in a bid to narrow the gap between the revenues it receives and the revenues it owes.

The U.K. has joined other countries in introducing tighter regulations on cryptocurrencies and NFTs — with profits from the sale of digital assets subject to capital gains tax. HMRC has also begun requesting information from exchanges on customers who have high transaction volumes.

NFTs and Money Laundering

NFTs have been known to sell for many millions of dollars.

Just last week, two people were arrested in the U.S. on suspicion of conspiracy to launder cryptocurrency linked to the Bitfinex hack — with the Justice Department seizing $3.6 billion worth of Bitcoin.

According to prosecutors, Ilya "Dutch" Lichtenstein and Heather Morgan struggled to use fake identities to open accounts on a number of crypto exchanges. This meant they needed to use trading platforms where they could convert BTC into prepaid debit cards, later spending the funds on Uber rides and Hotels.com bookings.

It's also believed that they had purchased a number of NFTs.

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