Professor Green was arrested on Monday on suspicion of perverting the course of justice.
Earlier this month the Read All About it rapper called police to say he had been mugged, claiming someone had stolen his expensive Rolex.
When officers responded to his call, they found his Mercedes had been in a crash. Green was held on suspicion of drink driving and spent the night in a cell before being bailed.
A police spokesperson told the Mirror:
A 29-year-old was arrested for attempting to pervert the course of justice after reporting for bail. He is bailed to a date in January pending further inquires.
Perverting the course of justice carries a maximum sentence of life in jail.