HM Revenue and Customs have seized a collection of Non-Fungible Tokens in a probe into suspected VAT fraud spanning over 250 alleged fake businesses.
The first NFT to ever be seized by British law enforcement, what makes the story so remarkable is that NFT’s are not a tangible object.
Non-Fungible Tokens exist purely in the digital world, can be bought and sold and value is attributed to them through artificial scarcity.
Owning an NFT image basically means you own a digital file. However, other internet users can and do download the same image but cannot claim to ‘own’ it.
The entire NFT ecosystem has been likened to gigantic Ponzi scheme that taps into the intrinsic human urge to have things others do not.
Nick Sharp, deputy director economic crime, said the groundbreaking seizure of an NFT “serves as a warning to anyone who thinks they can use crypto assets to hide money from HMRC”.
“We constantly adapt to new technology to ensure we keep pace with how criminals…look to conceal their assets.”
HMRC claims that suspects arrested in the landmark fraud case allegedly used “sophisticated methods” to mask their identities.
This included false IDs, false addresses, pre-paid unregistered mobile phones, virtual private networks and fake invoices to pretend they were conducting legitimate business.
How do you buy and sell NFTs?
NFTs are most commonly bought and sold on auction sites, which offer an English or Dutch style of auction.
An English auction is simple, it sees the highest bidder win and take ownership of the NFT.
A Dutch auction on the other hand can be confusing. This style sees an NFT start at a ceiling price, which if there are no buyers, reduces by a set amount until someone bids.
To buy and sell NFTs, you need to have a cryptocurrency wallet, as transactions are competed through the likes of Bitcoin and Ethereum – then verified through the blockchain .
There are many crypto wallets available and this is where your currency will be held.
Once you own an NFT, you are free to then hold onto it, or auction it off on whichever Non-Fungible Token auction house you choose.