The trial of B.H.R. and I.R.F., who were arrested by the State Security Service (DTX), has concluded.

Operativ Media reports that the proceedings were notable for marking the first time in judicial practice that cryptocurrency has been confiscated for the benefit of the state.

According to the verdict handed down by the Yasamal District Court, the defendants were found guilty under Article 206-1.3 of the Criminal Code of organizing the illegal and covert transfer of particularly large amounts of funds into or out of Azerbaijan through offsetting and other mutual settlement methods.

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

The court also ordered the confiscation of 830 units of cryptocurrency held in an account with the international virtual asset service provider Binance, which had been frozen under a court order during the preliminary investigation.

Under Article 99-1 of the Criminal Code, special confiscation provides for the compulsory and uncompensated transfer to the state of tools and means used in committing a crime, as well as property obtained through criminal means.

In addition, under Article 1.1 of the Law "On Combating the Laundering of Criminally Obtained Property and the Financing of Terrorism," criminally acquired property is also defined as including virtual assets.

The enforcement mechanism for confiscating cryptocurrency for the state is practically novel and has been widely discussed in the media. In this respect, the previously unregulated area remains a relatively new field both in Azerbaijan and globally.

Intensive work is underway in Azerbaijan toward adopting legislation to provide a legal framework for virtual assets and crypto markets.