Azerbaijan confiscates cryptocurrency in favour of state for first time
Cryptocurrency confiscated in Azerbaijan
The Yasamal District Court in Baku has sentenced two people arrested by the State Security Service, B.H.R. and I.R.F., and ordered the confiscation by the state of virtual assets identified as the proceeds or subject of the crime.
Details of the case
The defendants were found guilty under Article 206-1.3 of the Criminal Code. The article provides for criminal liability for organising the illegal covert transfer of particularly large sums of money out of Azerbaijan or into the country using set-offs and other forms of settlement.
According to the court’s ruling:
- B.H.R. received a two-year-and-five-month restriction of liberty and a fine of 3,623,568 manats (about $2.13 million);
- I.R.F. received a three-year restriction of liberty and a fine of 31,399,709 manats (about $18.47 million).
The court also ordered the state to confiscate 830 units of cryptocurrency held in an account on the international virtual-asset platform Binance. Investigators had frozen the assets during the preliminary investigation.
Official reports do not specify which cryptocurrency was involved, whether Bitcoin, Ethereum or another asset.
Legal basis
Under Article 99-1 of the Criminal Code, special confiscation involves the compulsory and free transfer to the state of tools and means used to commit a crime, as well as property obtained through criminal activity.
The Law on Combating the Legalisation of Property Obtained through Crime and the Financing of Terrorism also classifies virtual assets as property obtained through criminal activity.
The court has therefore applied the same legal regime to digital assets as it does to physical property for the first time in practice.
Context and significance
In 2025, the State Security Service had already secured a court order to freeze cryptocurrency in a similar criminal case. At the time, Baku’s Sabail District Court ordered the assets to be frozen. On 24 August, the process moved to the next stage: the authorities confiscated the assets.
Azerbaijan does not yet have a separate law governing virtual assets. The Central Bank previously said it expected the relevant draft law to be adopted by the end of 2026. Against this backdrop, the court ruling shows how authorities are addressing the existing legal gap in practice and could set a precedent for future regulation.
Experts note that international exchanges generally comply with court orders promptly. However, the authorities have not yet disclosed what will happen to the confiscated assets, including whether they could be sold at auction, transferred to state reserves or used in another way.
The case marks a new stage in Azerbaijan’s fight against digital crime and expands law enforcement agencies’ ability to track and confiscate virtual assets. At the same time, it highlights the real risks faced by people operating in the unregulated cryptocurrency market.
Cryptocurrency confiscated in Azerbaijan
