Britain's seizure of blockchain tokens is aimed at taking down VAT fraud ring

The UK's tax authority has seized three NFTs in the course of a sweeping probe into a VAT fraud ring involving 250 allegedly fake companies. The HM Revenue and Customs agency (HMRC) declared on Sunday that this was its first seizure of the blockchain tokens, which are often used as certificates of ownership for digital art or other online assets, and that the seizure was part of a $1.9 million (Pound 1.4 million) fraud case.

The suspects - three of whom have been arrested - allegedly used "suspicious methods" to hide their identities, from burner phones and fake addresses to stolen identities and VPNs. They used false invoices and pretended to take part in legitimate business, according to HMRC.

The agency's deputy director of economic crime, Nick Sharp, warned anyone thinking of following in the crime ring's footsteps that the seizure "serve[s] as a warning to anyone who thinks they can use crypto assets to hide money from HMRC." He boasted that the agency "constantly adapt[s] to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets."

While no specific value has been reported for the seized NFTs, the tax agency had secured a court order to confiscate accompanying cryptocurrency assets worth about $6,762 (Pound 5,000). While the agency has reportedly not taken control of the NFTs, it is apparently relying on a court order to prevent their sale, according to Sky News.

While NFTs first appeared on the digital asset scene in 2014, they took off in popularity more recently, with traditional art auction houses pulling in millions of dollars in NFT art, and celebrities like singer Justin Bieber and wellness influencer Gwyneth Paltrow pouncing on the trend.

However, as celebrities and companies like Visa have brought more attention to the much-hyped asset class, fraudsters have also found the poorly-regulated space to be a goldmine, developing all manner of schemes to inflate the value of NFTs they mint themselves or purchase for low prices - often by selling a virtually valueless token back and forth between accounts they control, increasing its apparent value in a process called wash trading.

Detractors - including artists whose work has been sold as NFTs without their knowledge - have pointed out that even some of the largest NFT marketplaces like OpenSea are lousy with frauds, posting desperate messages to their own social media accounts warning fans that any NFTs purporting to be from them are actually fakes. Efforts to have the phony NFTs removed are sometimes successful, but even those victories are often temporary, as OpenSea's listing process allegedly makes it relatively simple for sellers to post stolen works.

(RT.com)