THREE NFTs have been seized by UK tax officials following a fraud investigation.
The confiscation “serves as a warning to anyone who thinks they can use crypto assets to hide money”, Nick Sharp, deputy director economic crime at the UK’s tax department, said.
HM Revenue and Customs (HMRC) took control of the assets on Monday and arrested three people it suspected of attempting to defraud the taxman of $1.89million.
It is the first law enforcement action in the UK involving NFTs.
The non-fungible tokens are purchased with cryptocurrencies using blockchain technology.
HMRC said the suspects were alleged to have used “sophisticated methods” to hide their identities.
NFT purchases are also anonymous, allowing the alleged fraudsters to hide their wealth.
Sharp warned potential tax evaders that governments were quickly catching up with blockchain technology.
He said: “We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”
HMRC said it had secured a court order to see the crypto assets.
The three NFTs have not been valued by the authorities.
While HMRC has not physically taken control of the assets, the court order prevents them being sold onwards.
Tax agencies across the world are quickly having to learn to adapt to crypto technology as it grows increasingly popular.
In 2021, an estimated $23billion worth of NFTs were sold, up from just $94.9million in 2020.
Continuing the surge, in January this year, almost $15billion in total trading volume was completed.
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