Azerbaijan confiscates cryptocurrency to state for first time in court practice

An Azerbaijani court has issued the country’s first criminal verdict resulting in the confiscation of cryptocurrency in favour of the state.

The trial of B.H.R. and I.R.F., who were detained by Azerbaijan’s State Security Service, has been completed.

According to a ruling by the Yasamal District Court in Baku, both defendants were found guilty under Article 206-1.3 of the Criminal Code of organising the illegal transfer of particularly large amounts of funds between Azerbaijan and foreign countries through offsetting and other methods of mutual settlement.

B.H.R. was sentenced to two years and five months of restriction of liberty and fined 3.623 million manats. I.R.F. was sentenced to three years of restriction of liberty and fined 31.4 million manats.

Under the ruling, 830 units of cryptocurrency held in an account with international virtual asset service provider Binance and seized during the preliminary investigation were also confiscated in favour of the state.

Under Azerbaijani law, special confiscation provides for the compulsory and uncompensated transfer to the state of instruments and means used to commit a crime, as well as property obtained through criminal activity.

The law on combating the legalization of criminally obtained property and terrorist financing includes virtual assets in the definition of property obtained through criminal activity.

The confiscation of cryptocurrency in favour of the state is considered a new mechanism in Azerbaijan’s judicial practice. Work is currently under way to develop legislation governing virtual assets and the cryptocurrency market.