Her Majesty’s Revenue and Customs (HMRC) secured its place in history as the world’s first tax authority that seized a non-fungible token (NFT).

The United Kingdom’s financial watchdog seized 3 NFTs in total this week after investigating the potential VAT fraud case worth £1.4 million ($1.9 million) and involving 250 fake companies.

The move marks the first-ever NFT seizure in the United Kingdom, and “serves as a warning to anyone who thinks they can use crypto asses to hide money from HMRC”, authority’s officers told BBC.

According to the report, the UK’s law enforcement arrested three suspects and seized £5,000 (over $6,760) worth of cryptocurrencies together with 3 NFT artworks, whose real value has not been determined yet.

Wilsons Auctions was the first independent auction company to auction the tokenized assets seized.

As far as it is known, the UK’s tax authority secured a court order to prevent NFTs and digital currencies from being accessed and sold further.

The new NFTs Target (NYSE:)

Non-fungible tokens have become an increasingly popular medium for illicit activity around the world, following the explosion of popularity in the NFT marketplace.

NFTs can be used to wash trade and launder money, as stated by blockchain analytics Chainalysis in its recent Crime and NFTs reports.

It states that wash trading has already brought in nearly $9 million to illicit traders. This tactic is used to artificially increase the NFT’s price by selling it on to another wallet that belongs to the seller.

Melania Trump bought NFTs from her collection. This was a similar story.

NFT trading is illegal because of the absence regulation. “Many NFT trading platforms allow users to trade by simply connecting their wallet to the platform, with no need to identify themselves”, explains Chainalysis experts.

Chainalysis identifies money laundering as another form of NFT misuse. Its report states that the amount sent by NFT market participants to illicit addresses almost tripled between the first and fourth quarters 2021. This refers to digital asset wallets which are associated with fraud and stolen funds.

Chainalysis fears that the NFT market could become an extension to the traditional fine arts market where money laundering is a problem for many years.

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