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NFTs are now worth seizing, according to U.K. tax authorities

February 14, 2022, 5:53 PM UTC

Britain’s tax authorities said they are the first law enforcement agency to seize a non-fungible token, or NFT, BBC News reported

As part of a £1.4 million, or about $1.9 million fraud case, Her Majesty’s Revenue and Customs seized £5,000 ($6,762) worth of crypto assets and three yet-to-be-valued NFT artworks.

NFTs are digital assets that can take the form of a photo, GIF, or audio file and can be bought and sold online and whose ownership is recorded in a digital ledger.

Nick Sharp, HMRC’s deputy director of economic crime, told BBC News that the seizure “serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC.”

There are three suspects in custody. They allegedly used 250 fake companies, fake addresses, and prepaid phones to try to hide their identities from the authorities.

Her Majesty’s Revenue and Customs did not immediately respond to Fortune’s request for comment.

The U.K.’s NFT seizure might be the first of its kind, but it’s the latest action regulators have taken against digital assets globally. Last week the U.S. Justice Department, in its biggest financial seizure ever, recovered $3.6 billion in stolen cryptocurrency from two millennials who are accused of trying to launder it. 

NFTs are different from cryptocurrencies in that they are unique digital collectibles and can be sold on a third party marketplace like OpenSea. 

About $44 billion in transactions were recorded in the NFT industry last year, according to a report from blockchain data platform Chainalysis. And while cryptocurrencies like Bitcoin and Ether saw major price declines early this year, the top 100 NFT collections have more or less held their value, according to a report by DappRadar, a data acquisition and analysis company that tracks the NFT industry. 

With the amount of money being funneled to NFTs, regulators in the U.S. are starting to take notice. SEC commissioner Hester Peirce told CoinDesk in late December, “Given the breadth of the NFT landscape, certain pieces of it might fall within our jurisdiction.”

Thailand’s Securities and Exchange Commission said late last month it would require operators of NFT marketplaces to apply for business licenses, according to the Bangkok Post

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