UK nabs NFTs in tax-fraud probe, the first-ever seizure of digital collectibles by the country's law enforcement

• UK law enforcement has seized NFTs as part of an investigation into suspected tax fraud worth $1.9 million, BBC reported Monday.
• HMRC, the UK's tax authority, said it was the first seizure of NFTs by UK law enforcement.

The UK's tax department seized three non-fungible tokens as part of an investigation into potential tax fraud, marking the first time UK law enforcement has taken possession of such digital collectibles, according to reports Monday.

HM Revenue and Customs, or HMRC, said three people have been arrested on suspicion of attempting to defraud the tax authority of £1.4 million ($1.9 million), the BBC reported.

HMRC said the seizure of the NFTs stemmed from an investigation of suspected value-added tax fraud involving 250 alleged fake companies. The suspects allegedly used virtual private networks, false addresses, unregistered prepaid mobile phones, and other methods to hide their identities as they pretended to run legitimate businesses.

The tax department said it was the first time UK law enforcement has seized an NFT, according to the report. It also said it had obtained a court order to detain three digital artwork NFTs and crypto assets while it continues its investigation. The crypto assets were worth about £5,000, while the NFTs have not yet been valued.

The NFT market soared to a value of $41 billion during 2021, according to Chainalysis, a blockchain data company.