Azerbaijan Confiscates Cryptocurrency for First Time in Criminal Case

The criminal case against B.H.R. and I.R.F., detained by the State Security Service (SSS) of the Republic of Azerbaijan, has concluded. This process became the first instance in practice of confiscating cryptocurrency in favor of the state.

According to the verdict of the Yasamal District Court, the defendants were found guilty under Article 206-1.3 of the Criminal Code of the Republic of Azerbaijan of organizing activities for the illegal covert transfer of funds in especially large amounts from Azerbaijan to a foreign state or from a foreign state to Azerbaijan through mutual offsets and other methods of settlements.

B.H.R. was sentenced to 2 years and 5 months of restriction of liberty and a fine of 3,623,568 manats, while I.R.F. was sentenced to 3 years of restriction of liberty and a fine of 31,399,709 manats.

At the same time, the verdict confiscated 830 units of cryptocurrency in favor of the state, which were stored in an account at the international virtual asset service provider Binance, which had been seized by court order during the preliminary investigation.

It should be noted that according to Article 99-1 of the Criminal Code, special confiscation provides for the compulsory and gratuitous conversion to state ownership of instruments and means used in the commission of a crime, as well as property obtained by criminal means. At the same time, according to Article 1.1 of the Law of the Republic of Azerbaijan 'On Combating the Legalization of Property Obtained by Criminal Means and the Financing of Terrorism', property obtained by criminal means also includes virtual assets.

The mechanism for executing the confiscation of cryptocurrency in favor of the state is new in practice, and the issue is widely discussed in the media. In this regard, this sphere, which until now remained unregulated, remains a relatively new direction globally, as well as in Azerbaijan.

It is worth recalling that Azerbaijan is intensively working on adopting a law providing for the legal regulation of virtual assets and cryptocurrency markets.