Georgia's cryptocurrency sector is facing renewed regulatory scrutiny after authorities arrested the manager of an unregistered virtual asset service provider accused of processing transactions worth tens of millions of U.S. dollars.

The arrest comes amid increasing international attention on cross-border digital currency operations and their compliance with national financial regulations. Georgia has attracted a growing cryptocurrency industry in recent years, aided by relatively low operating costs and a light-touch regulatory environment, but authorities now appear to be tightening oversight of firms operating outside the formal financial system.

Arrest and Seizure Details

On August 12, the Investigation Service of Georgia's Ministry of Finance announced the arrest of the individual responsible for managing the unregistered virtual asset service provider. According to the report, the suspect had been conducting transactions valued at "tens of millions of US dollars" without completing the registration process required by the National Bank of Georgia.

The operations reportedly involved converting between virtual assets and fiat currency, as well as facilitating international transfers. The Investigation Service stated that the activity "facilitated uncontrolled international transactions" within the country.

During the investigation, authorities seized computer equipment, numerous bank cards, documents, $83,903 in cash, €300, and cryptocurrency valued at $79,600.

The case falls under Article 192, Part 2(a) of Georgia's Criminal Code, which carries a prison sentence of three to five years. The registration requirement for virtual asset service providers aligns with global standards set by the Financial Action Task Force (FATF), the intergovernmental body that recommends countries license or register such providers to prevent money laundering and illicit finance.

OFAC Sanctions on Georgian Crypto Firm Shelbit

The arrest also draws attention to broader regulatory concerns surrounding Georgia's digital asset industry. Recently, the U.S. Treasury's Office of Foreign Assets Control (OFAC) imposed sanctions on Georgian digital asset firm SHPS Shelbit and its owner, Siavash Kayvanpour, as reported.

According to OFAC, the firm facilitated cryptocurrency transactions linked to Iran's Islamic Revolutionary Guard Corps (IRGC) as part of sanctions-evasion activities. The agency alleged that more than $1 million was moved from IRGC-linked wallets to Shelbit's wallets, while over $2 million was transferred in the opposite direction. The designation reflects a broader U.S. enforcement strategy of using sanctions against cryptocurrency firms accused of enabling sanctioned entities to move funds across borders.

Importantly, the arrested manager has not been identified by any official source as having ties to Shelbit. There is currently no official indication that the two cases are connected, and they should be regarded as separate developments.

Ongoing Investigation and Regulatory Implications

The Investigation Service noted that it continues to identify additional individuals who may be involved and is investigating potential tax evasion and the laundering of illicit income.

The enforcement action signals intensifying regulatory pressure on unregistered virtual asset businesses operating in Georgia. As authorities crack down on unregistered companies and cross-border digital currency transactions, digital asset firms in the country may face mounting compliance requirements under local regulations. The developments parallel a wider global trend, as governments across multiple jurisdictions implement FATF-aligned frameworks requiring virtual asset service providers to register, conduct customer due diligence, and report suspicious activity.