According to BBC News, the UK’s tax department, Her Majesty’s Revenue and Customs (HMRC), claims to be the first authority in the country to confiscate an NFT. The confiscation was done as part of a fraud investigation worth £1.4 million (approximately $1.9 million) in which three people were arrested. The government seized £5,000 in cryptocurrency (about $6,762), as well as three NFT artworks that have yet to be valued.
As the value of cryptocurrencies has skyrocketed, high-profile seizures by authorities have grown more prevalent. The US Department of Justice confiscated $3.6 billion in cryptocurrencies tied to the 2016 Bitfinex breach earlier this month. However, this is one of the first high-profile seizures of NFTs, which are digital assets used to prove ownership of material such as photographs or songs.
HMRC “constantly adapt[s] to new technology to ensure we keep pace with how criminals and evaders attempt to disguise their assets,” according to Nick Sharp, deputy director of economic crime at HMRC. He told BBC News that the seizure “serves as a warning to anyone who thinks they can hide money from HMRC using crypto assets.”
The suspected scam allegedly encompassed 250 bogus firms, and the three suspects allegedly utilized a variety of methods to conceal their operations from HMRC, including fake addresses, prepaid phones, VPNs, and stolen identities. HMRC has not taken custody of the NFTs, according to Sky News, but it is using a court injunction to prevent them from being sold.
Authorities seizing NFTs is unlikely to be the last time we hear about it. According to Bloomberg Quint, an IRS special agent recently stated that the agency is increasingly focusing on crypto-assets due to the “mountains” of fraud it is seeing in the industry. With individual NFTs selling for millions of dollars as part of a $16 billion business, it’s only a matter of time until authorities get involved.