Czechia’s bitcoin scandal: money-laundering or mere mismanagement?

In mid-June the Czech parliamentary opposition tabled a no-confidence motion against the government after the Ministry of Justice sold nearly 500 BTC donated by a convicted criminal (~$45m at the time of sale).

ForkLog examines how the scandal could reshape the country’s political landscape.

Background

The affair is closely tied to the investigation of the darknet marketplace Sheep Marketplace. Launched in March 2013, it quickly gained local traction after Silk Road’s closure, offering a similar range of illicit goods and services.

But by December that year the anonymous marketplace shut down following the theft of 5,400 BTC (~$6m at the time) by one of its vendors.

Several years later two Florida residents, Shaun McCarty and Nathan Gibson, were found guilty of stealing Sheep Marketplace’s assets.

The marketplace’s creator, Czech programmer Tomáš Jiríkowský, was arrested in spring 2016. He was charged with stealing roughly 40,000 BTC during Sheep Marketplace’s exit scam, drug trafficking and illegal arms possession. In 2017 Jiríkowský received a nine-year sentence.

Paroled in 2021, the programmer demanded the return of seized equipment, including a laptop with a bitcoin wallet holding about 1,560 BTC. The case stalled in court until March 2025, when Jiríkowský, via his lawyer, donated 468 BTC (30%) from the confiscated assets to the government.

The sale sparked public anger

The Ministry of Justice did not rush to liquidate the coins. It converted them into koruna under its standard procedure in cooperation with ÚZSVM via electronic auctions in 5 BTC tranches from late March to May 27, 2025. Sales contracts are listed in the contract registry.

On May 28 the ministry announced it had completed auctions of cryptocurrencies totaling 956.8m Czech koruna (~$45m at the time), without disclosing the funds’ provenance.

Poslední veřejná dražba se uskutečnila včera 27. května, celkem bylo úspěšně realizováno 78 elektronických aukcí a do majetku státu směřuje 956,8 mil. Kč. Více informací se dozvíte na zítřejší tiskové konferenci. Akreditace jsou možné zde: https://t.co/5PYWFoeGNS https://t.co/1FoG3NXIoI pic.twitter.com/hUzce16hxy

— Ministerstvo spravedlnosti ČR (@SpravedlnostCZ) May 28, 2025

The proceeds were to be directed to justice-sector projects:

• digital transformation of the court system;
• anti-drug programmes in Czech prisons;
• better housing for corrections staff.

That evening, independent outlet Deník N reported that the bitcoins were a donation from the convicted Jiríkowský.

Some reports say the donation to the ministry’s wallet came from a source linked to another darknet marketplace—Nucleus Market. The platform was unrelated to Sheep Marketplace but abruptly ceased operations in 2016, soon after Tomáš Jiríkowský’s arrest.

Radiožurnál claims the bitcoins were sent to the ministry on March 7 in five separate payments in the presence of a notary. Four purportedly came from a Nucleus Market account and one directly from Jiríkowský’s account, which he had funded the day before.

An analysis of the Nucleus Market wallet shows it still holds 3,855.15 BTC. One theory is that the funds are inaccessible.

Some experts, however, deem the attribution of Nucleus Market assets to Jiríkowský “unreliable and unlikely”.

The now former justice minister, Pavel Blažek, told a press conference they spent 30 hours opening Jiríkowský’s wallet. This can be explained by the wallet’s era: at the time, access could depend on addresses stored in the wallet file, whereas modern seed phrases provide universal access.

The Deník N report sparked public outrage. The main opposition force—the right-conservative ANO party—accused the government of corruption and an opaque asset sale.

Deputy party chair Alena Schillerová said there was “no other option but to initiate a vote of no confidence”.

Nemáme na vybranou. Právě jsem jménem poslaneckého klubu Hnutí ANO podala návrh na svolání mimořádné schůze k vyslovení nedůvěry vládě Petra Fialy. První vlády, která spolupracovala s mafií.

— Alena Schillerová (@alenaschillerov) June 12, 2025

ANO’s demands include an independent inquiry to determine whether the bitcoins’ legal status was properly verified before sale. Further anger followed reports that some auction winners are seeking refunds and clarification on possible compensation.

Legal experts and opposition leaders did not rule out that the donation skirted asset-confiscation laws. The National Centre against Organised Crime (NCOZ), overseen by the Prosecutor General’s Office, launched a formal investigation.

Defending himself, Justice Minister Pavel Blažek said the ministry had never received such a donation before, but would not speculate on its motives:

“Why can’t a convicted person donate something to the state, possibly as a form of repentance?”

He also stressed he had no ethical qualms about accepting the donation.

“If, in the future, the criminal origin of the funds were proven, the state would still confiscate them, and they would be used in the budget. From an ethical point of view, I had nothing to think about,” the minister added.

In early April Czech police seized an additional 50 BTC from Jiríkowský, worth about 117m koruna, which he had exchanged through the payment service IP wBTCb solutions. According to the Financial Analytical Office, the transaction may have constituted money laundering.

Political fallout

On May 30, under mounting pressure, Blažek resigned. He denied wrongdoing, saying he wished to protect the government’s reputation ahead of parliamentary elections.

Po dohodě s předsedou vlády @P_Fiala jsem se rozhodl podat demisi na funkci ministra spravedlnosti. Nejsem si vědom žádného nezákonného jednání. Nechci ovšem poškozovat pověst vlády ani vládní koalice .

— Pavel Blažek (@blazek_p) May 30, 2025

“I am not aware of any illegal conduct. However, I do not want to damage the reputation of the government or the ruling coalition,” the official said.

Later Blažek said the donor received no quid pro quo. According to journalists, Jiríkowský’s equipment had already been returned in January 2025; his March donation therefore “made no sense” and may have been an attempt to launder funds.

Eva Dekrua was appointed the new justice minister. She pledged to initiate and oversee an independent review of the ministry’s handling of the cryptocurrency sale.

On June 17, during the lower house debate on the no-confidence motion in Prime Minister Petr Fiala’s cabinet, ANO chair Andrej Babiš called the sale of Jiríkowský’s bitcoins “the biggest scandal in the history of the Czech Republic”.

“It was an organised operation aimed at laundering dirty money. The operation was planned by the justice minister, the finance minister took part. The prime minister covered it politically,” he said.

Even so, on June 18 the opposition fell seven votes short (94 of the 101 required) of toppling the government.

The stand-off could have far-reaching consequences and influence the general election on October 3rd-4th.

Grave allegations

The crux of the accusation is that the 468 BTC donated by Tomáš Jiríkowský may have been exchanged for inaction by agencies under the Ministry of Justice when it came to seizing his remaining cryptoassets.

As Eliza-Tatiana Baseley, founder of the legal agency Baseley & Partners, told ForkLog, the return of electronic devices—including those to which experts failed to gain access—stemmed from strict evidentiary standards in criminal procedure and the principle of non-interference with private property.

“Under criminal-procedure standards, the state may retain equipment only if there is evidence that it contains access to bitcoins and that these assets are linked to criminal activity. Assumptions alone are insufficient,” the lawyer noted.

In her view, Jiríkowský was able to open his bitcoin wallets in the following months. If law enforcement proves the donation to the ministry was given as a guarantee of the inviolability of the remaining funds, then formally it amounts to money laundering.

“Czech law provides no mechanism for a deal in which the state agrees to accept only part of property obtained through crime in exchange for abandoning attempts to seize the rest. Under a plea agreement one can obtain mitigation or deferral of punishment and an instalment plan for fines. But property obtained through crime is always confiscated in full. The court must approve any plea agreement,” Baseley said.

Thus, in this case the Ministry of Justice is presumably operating beyond permissible legal procedures.

“If the prosecution’s suspicions are proven, the grounds for initiating a criminal case on the legalisation of proceeds of crime are serious,” the expert concluded.

Cryptocurrencies and corruption

Czechia’s case, in which cryptocurrency features in alleged corruption schemes, is far from unique.

In October 2024 former Moscow investigator Marat Tambiev was sentenced to 16 years in prison and fined 500m rubles for taking a bribe in cryptocurrencies.

According to the case file, he received over 2,718 BTC (7.3bn rubles at the time) and $1.5m from members of the Infraud Organization hacking group in exchange for a promise not to seize their assets. Access codes to two accounts were stored on the defendant’s computer in a folder titled “Pension”.

In July 2025 Rosfinmonitoring, the FSB and the Interior Ministry announced a methodology that will enable commercial banks to detect corruption schemes involving cryptocurrencies.

The agencies acknowledged a rise in crypto-based settlements in corruption deals and put their current scale at 13.5bn rubles, based on detected cases.

In November 2024 Ukraine’s High Anti-Corruption Court sentenced MP Andriy Odarchenko in absentia to eight years in prison with confiscation of property for attempting to pay a bribe in bitcoins.

According to prosecutors, in August 2023 the lawmaker offered then-head of the State Agency for Restoration, Mustafa Nayyem, $50,000 in bitcoin in exchange for help securing money from the fund for eliminating the consequences of Russia’s armed aggression.

He planned to use the funds to repair buildings of the Kharkiv State Biotechnological University, where he was rector.

The court barred Odarchenko from holding senior public office for three years. 0.39 BTC was confiscated to the state.

That same month in China, former first director of CBDC development at the People’s Bank, Yao Qian, was expelled from the Communist Party over allegations of corruption involving cryptocurrencies.

Following the probe, he was accused of falsely presenting himself as a financial-technology expert, favouring technology providers and abusing his authority.

A crypto reserve on hold

The bitcoin scandal in Czechia has exposed vulnerabilities in the state’s management of digital assets. It highlights the risks of integrating cryptocurrencies into public institutions without adequate regulatory foresight, civil-service literacy and operational transparency.

The country recently adopted MiCA, exempting bitcoin holders from capital-gains tax. The national bank is studying the possibility of creating a cryptocurrency reserve.

Lawyer Eliza-Tatiana Baseley stressed that MiCA does not alter the foundations of national criminal law and confiscation principles: property of criminal origin remains subject to full seizure, and without proof linking particular assets to a crime, devices and wallets are returned to the owner.

However, in her view, practical tools for identifying, freezing and transferring cryptoassets will improve markedly thanks to coordinated information exchange and unified oversight.

She also did not rule out that the donation and subsequent political upheaval will create a more negative backdrop for cryptocurrencies and slow momentum behind the idea of a bitcoin reserve.

“One can assume that the idea of creating a crypto reserve will go into a ‘standby mode’ until the media focus shifts after the elections and stricter regulatory practices are developed,” she added.

Similar ethical debates have flared in Argentina over President Javier Milei’s promotion of the Libra token and in the United States over Donald Trump’s crypto initiatives.

The Czech scandal could trigger tighter government protocols for handling digital assets and more rigorous vetting of incoming donations.