Britain’s Tax Watchdog HMRC Makes its First NFT Seizure

The United Kingdom’s tax watchdog, Her Majesty’s Revenue and Customs (HMRC) has arrested three people for tax evasions worth £1.4 million. The crackdown was accompanied by the seizure of Non-Fungible Tokens (NFTs), a rare move that sets a precedent in the crackdown involving digital currencies. 

As reported by the BBC, the HMRC said it was the first British law enforcement to seize an NFT. The perpetrators of the tax evasion crime that were arrested were noted to have reportedly used all kinds of sophisticated measures to cover up their tracks in their attempt to avoid paying taxes. Amongst the measures they resorted to including the hiding of their identities, using stolen identities, false addresses, pre-paid unregistered mobile phones, Virtual Private Networks (VPNs), false invoices, and pretending to engage in legitimate business activities.

The suspects reportedly opened as many as 250 fake “shell” companies using the number of fake identities they possessed and following the bust of this criminal activity, the HMRC obtained a court order to seize 5,000 pounds ($6,765) worth of digital assets alongside the confiscated NFTs.

Per the BBC report, Nick Sharp, deputy director of economic crime, said the first seizure of an NFT “serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC,” adding that the agency “constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets.”

More Tax Watchdogs to Trail this Path?

It is not uncommon for a law enforcement agency to seize digital currencies linked to Bitcoin and other cryptocurrency-related fraud activities. While each country is trying to develop its guideline for interacting with the cryptocurrency ecosystem, the NFT seizure from the HMRC can set a new reference for other regulators to follow suit.

There has been a lot of claims that the massive growth in terms of quantity and valuation of NFTs is pushing many mainstream brands to explore digital collectibles, the new assets can serve as a cover by money launderers to perpetuate their actions unhindered. With the confirmation that related crackdowns are possible with one regulator, it will not come as much of a surprise if other tax watchdogs trail this path in the near future.