Three persons have been detained on suspicion of trying to deceive the United Kingdom tax authorities in the first investigation involving the seizure of NFTs, according to police.
The United Kingdom's tax authority seized three nonfungible tokens as part of an investigation into a suspected instance of value-added tax fraud worth 1.4 million pounds ($1.9 million), marking the first time such a seizure has taken place in the country.
Three persons have been detained on suspicion of trying to cheat the government by creating a network of 250 fictitious firms, according to Her Majesty's Revenue and Customs, which sent a statement through email. Authorities also recovered additional cryptocurrency assets worth around 5,000 pounds, while the value of the NFTs has not yet been determined.
Non-fiat tokens, a sort of digital asset that can be transferred across blockchain networks, acquired broad favor among crypto traders and art collectors alike last year, even breaking into renowned auction houses such as Christie's and Sotheby's with multimillion-dollar auction sales. According to an examination of NFTGo data conducted by crypto research company Messari earlier this month, the market is worth around $16 billion.
A cryptocurrency called Ether is commonly used to purchase and sell the tokens, which serve as a representation of ownership of a digital item like as music or a picture. The most popular ones take the shape of digital avatars, which owners may use as their online profile pictures, such as those featured in collections from the Bored Ape Yacht Club or CryptoPunks, which are available for purchase. It is possible for these assets to be worth millions of dollars, and they have drawn the attention of celebrities such as Paris Hilton, Reese Witherspoon, and Serena Williams in the recent months.
This is the first time that we have discovered someone using a Non-Fungible Token to conceal money from HMRC, and it should serve as a caution to anybody who believes they can use cryptocurrency to hide money from HMRC, said Nick Sharp, HMRC's Deputy Director Economic Crime. As new technology becomes available, we must continuously adapt in order to stay ahead of criminals and tax evaders who want to hide their assets.
It comes only a week after the United States confiscated $3.6 billion in stolen Bitcoin in the greatest financial seizure in history, underscoring the determination of law enforcement to demonstrate that bitcoin is not a safe haven for criminal activities.
David Carlisle, the head of policy and regulatory affairs at crypto research company Elliptic, commented on the incident, saying: "This case proves once again that criminals cannot hide in the realm of cryptocurrency." According to the report, "Enforcement authorities are able to detect and trace criminals' transactions, as well as confiscate non-fiat currencies and cryptoassets used in illegal activities, denying criminals their gains."
False and stolen identities, false addresses, pre-paid unregistered mobile phones, Virtual Private Networks (VPNs), false invoices, and pretending to engage in legitimate business activities, according to HMRC, were among the sophisticated methods used by the suspected fraudsters to try and conceal their identities.
As Sam Roberts, a Partner at legal firm Cooke, Young and Keidan, said, "Fraudsters often flourish in environments where asset values increase fast, therefore it comes as no surprise to see them benefiting on the expansion of NFTs." Although it may have seemed like a high aim for public blockchains and the asset classes on which they are built, in fact this has not been achieved - often as a result of thefts and fraud," writes the author.
Creators and owners who follow the law His words were encouraging: "We should be heartened that the courts are continuing to defend digital ownership rights, and we can expect to see more of this in the future."
SOURCE: NEWS AGENCIES
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