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Highlights
- The HMRC has seized three non-fungible tokens (NFTs) as a part of the £1.4 million (US$1.9 million) fraud case.
- The NFT seizure was a part of a suspected value-added tax (VAT) evasion case, where three suspects were arrested on suspicion of attempting to defraud the HMRC officials.
- The three allegedly used sophisticated means to dupe the officials, such as creating fake ids and creating 250 shell companies.
UK tax watchdog Her Majesty’s Revenue and Customs (HMRC) has been tightening the noose around the crypto frauds for some time now. Recently, the HMRC made certain changes to the DeFi lending and staking rules, which is expected to have a significant impact on the development of innovation in the Decentralised Finance sector.
Recently, the HMRC seized three non-fungible tokens (NFTs) as a part of the £1.4 million (US$1.9 million) fraud. The NFT seizure was a part of a suspected value-added tax (VAT) case, wherein three suspects were arrested on suspicion of attempting to defraud the HMRC officials.
NFTs are primarily digital assets, which can be in the form of painting, GIF that can be used for transactions and whose ownership is recorded in a digital ledger.
Major seizure
This is one of the first NFT seizures by the UK law enforcement agency. In July 2021, the Metropolitan Police had seized a haul of cryptocurrency worth almost £180 million.
The three allegedly used sophisticated means to dupe customers, such as creating fake ids and forming around 250 shell companies. Nick Sharp, HMRC’s deputy director of economic crime, claimed that this development would be a strict warning to those who believe that they can get away with such frauds.
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Sharp added that the HMRC constantly adapts to new technology to keep cyber criminals or tax evaders at bay.
Increasing crime rate
There has been a clear spike in crypto crimes of late. Earlier this month, the Department of Justice had seized US$3.6 billion worth of cryptocurrencies that were linked to the 2016 Bitfinex hack. In fact, according to information from blockchain data platform Chainalysis, NFT-related crime has given rise to money laundering activities.
According to the Chainalysis 2022 Crypto Crime Report, in Q3 2021, funds were sent from illicit addresses to various NFT marketplaces, which was approximately around US$1 million. In Q4, it was around US$1.4 million, of which approximately US$284,000 worth of cryptocurrencies were sent to NFT marketplaces from illicit addresses.
Rising crypto popularity has often been a point of debate, therefore, it is being watched closely by the lawmakers in the country. HMRC’s recent development does highlight the risks involved in trading cryptocurrencies and why one should tread carefully into the world of digital currencies.