NFTs Linked to Tax Evasion Case
According to the BBC, Her Majesty’s Revenue and Customs (HMRC) arrested the suspects on suspicions that they were trying to avoid paying value-added tax (VAT) worth £1.4 million ($1.89 million). The suspects allegedly used what the HMRC called “sophisticated methods” to conceal their identities.
The individuals used flash addresses, virtual private networks (VPNs), stolen identities, false invoices, prepaid unregistered mobile phones, and set up 250 dummy companies so they could operate anonymously. Furthermore, the UK tax authority said that it confiscated cryptocurrency worth £5,000 ($6,754) and three NFTs yet to be valued. The HMRC noted that it was the first time law enforcement in the United Kingdom had seized an NFT.
HMRC’s deputy director of economic crime, Nick Sharp, said that the NFT seizure “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 and evaders look to conceal their assets.”
NFTs continue to make headlines the world over. Some of the most expensive NFTs ever sold include The Merge, a digital artwork by Pak, purchased for $91.8 million on NFT marketplace Nifty Gateway; Everyday: The First 5000 Days created by digital artist Michael Winkelmann (also known as Beeple) for over $69 million; and The Human One also by Beeple, for $29,985,000.
Celebrities such as tennis star Serena Williams, rap icon Eminem, Canadian singer Justin Bieber, American professional Basketball player Steve Curry, have all made large NFT purchases as of late.
Regulatory Crackdown Grows Around Crypto Collectibles
The growing popularity of NFTs continues to raise concerns among global regulators. Back in June 2021, Thailand’s Securities and Exchange Commission (SEC) banned the trading of meme tokens, fan tokens, and NFTs. Furthermore, France’s Financial Action Task Force (FATF) in its final guidelines published October 2021, said that NFTs may be regarded as virtual assets and can be regulated if they are used for investment or payment purposes.
While NTF’s are encountering mounting regulatory pressures, NFT minting is coming under criticism for its detrimental environmental impact. South Korean entertainment giant HYBE, which manages popular boy band BTS, was pilloried in November, after announcing plans to go into NFTs. BTS fans, also known as “ARMY” took to Twitter to trend the hashtags #BoycottHybeNFT and #ArmysAgainstNFTs. The fans said that NFTs were harmful to the environment, and HYBE’s action went against BTS’ earlier speech on climate change at the UN in September.
Despite backlash from fans, HYBE said that it was moving ahead with its NFT plans. Speaking to the Wall Street Journal in December, project lead for HybeAmerica, John Kim, said:
“We believe NFTs have the potential for expansion and hope they will provide fans with more varied experiences and opportunities to express themselves.”