LONDON: Britain’s tax body on Monday said it had seized three digital artwork NFTs while investigating suspected tax fraud, as it issued a warning to people using crypto-assets to hide money.

NFTs (non-fungible tokens) have rapidly become a mainstay of auction houses and the art market, where virtual works have fetched multimillion-dollar prices. Britain’s tax-collecting body, HMRC, said it had become the first UK law enforcement agency to seize an NFT.

It occurred “during an investigation into a suspected organised value added tax repayment fraud involving 250 alleged fake companies”, said a statement.

Three people have been arrested on suspicion of attempting to defraud HMRC of £1.4 million ($1.9 million, 1.7 million euros), it added. “Our first seizure of a non-fungible token serves as a warning to anyone who thinks they can use crypto-assets to hide money from HMRC,” said Nick Sharp, the tax agency’s deputy director, economic crime.

“We constantly adapt to new technology to ensure we keep pace with how criminals and evaders look to conceal their assets,” he added.