Madadi was part of a group convicted of breaking into and stealing merchandise from a high-end handbag store in Stockholm, according to a report by MMAnytt.se.
Madadi’s UFC contract was suspended during the investigation, but if his conviction is upheld, the contract will be terminated.
“If he stole a bunch of handbags and is convicted of it, yeah, I'm sure he's gonna be cut,” said UFC president Dana White on Saturday night following UFC Fight Night 26 in Boston.
In addition to jail time, Madadi and his cohorts are also required to pay damages.
Madadi has until Sept. 6, 2013, to appeal, but remains in jail.
The 35-year-old Iranian born fighter has amassed a 13-3 professional record, including going 2-1 in the UFC. His latest fight was a victory over Michael Johnson at UFC on Fuel TV 9 on April 6 in Sweden.