In Azerbaijan's legal practice, a landmark event has occurred: a court has for the first time ordered the confiscation of digital assets in favor of the state. This decision, issued by the Yasamal District Court of Baku, concluded a multi-stage process that began over a year ago with the seizure of assets in a criminal case.
The essence of the case and the verdict
The defendants, known as B.H.R. and I.R.F., were found guilty under Article 206-1.3 of the Criminal Code. This provision classifies the organization of illegal transfers of funds on an especially large scale through mutual settlements and other payment schemes, both from Azerbaijan abroad and in the reverse direction. The sentence, announced on August 24, proved severe: B.H.R. received a restriction of liberty for 2 years and 5 months and a fine of 3.623 million manats (about $2.13 million), while I.R.F. received 3 years of restriction of liberty and a fine of 31.399 million manats (approximately $18.47 million).
The key point was the seizure of 830 units of cryptocurrency held in accounts on the international exchange Binance. The investigation placed a freeze on these funds as early as the preliminary investigation stage, and now they have finally passed into state ownership. Notably, the official documents do not specify which coins are involved — BTC, ETH, or other tokens.
Legal framework and unprecedented nature
The legal basis for the confiscation was Article 99-1 of the Criminal Code, which allows for the compulsory and gratuitous seizure of instruments and means of crime, as well as property obtained through criminal means. Current legislation on combating money laundering already equates virtual assets with property, which allowed the court to apply this regime to digital valuables for the first time.
This case is not merely an isolated episode. Earlier in 2025, the Sabail District Court of Baku had already authorized the freezing of crypto assets in a similar case, but now the process has reached its logical conclusion — the actual transfer of funds to the state.
Context and significance for the market
It is worth emphasizing that Azerbaijan has still not adopted a separate law on virtual assets. The country's Central Bank expects its introduction no earlier than the end of 2026. Against this backdrop, the court decision demonstrates how existing legal norms are adapting to the realities of the digital economy, filling the legislative vacuum in practice.
International exchanges, as a rule, promptly comply with court orders, which is what happened in this case. However, the further fate of the seized funds — sale at auction, crediting to state reserves, or other use — remains uncertain for now.
My comment: This precedent signals a qualitative shift in the approaches of Azerbaijani law enforcement to combating digital crime. For participants in the unregulated crypto market, this is an alarming wake-up call: law enforcement practice in the region is rapidly catching up with technological innovation, and the risks of operating outside the legal framework are becoming increasingly tangible.