EXPLAINED: The bitcoin scandal shaking Czech politics—and what's at stake

Czechia’s government is currently embroiled in a scandal that could significantly impact its chances of winning the next general election, which is just four months away. One justice minister has already resigned, with talk of other senior ministers walking away—or perhaps even the whole government collapsing.

An urgent session in the Chamber of Deputies will be held to discuss the next steps on Thursday, June 5. The scandal involves bitcoin, a convicted drug trafficker, and an illegal marketplace on the darkweb. Here’s exactly what you need to know—and why it matters.

Back in March this year, the Czech Ministry of Justice quietly accepted a donation of 468 bitcoins—worth nearly CZK 1 billion—from Tomáš Jiřikovský, a wealthy and convicted drug trafficker who previously ran an illegal marketplace on the darkweb. 

After Jiřikovský was released from prison, he regained access to electronics that had been confiscated during his arrest. Jiřikovský offered the ministry 30 percent of the wallet’s contents in exchange for its cooperation in opening it. Then-Justice Minister Pavel Blažek agreed. The transaction went ahead.

Nothing major happened in late May. That’s when Czech media outlet Deník N broke the news of the deal. 

Critics argue that the donation should never have been accepted without verifying the funds' origin. Jiřikovský was convicted for drug trafficking and illegal arms sales using bitcoins, so the money is widely believed to be proceeds from criminal activity. Accepting it risks legitimizing or laundering illegal profits, and also suggests a form of bribery.

The Justice Ministry also failed to alert financial watchdogs or the police before taking the funds. Opponents say the act violated ethical standards and damaged trust in rule of law, even though the transaction was technically legal.  

Blažek was quick to defend himself. He claimed the money wasn’t proven to be criminal and was “clean.” He told Czech media: “Everything is so ultralegal that it couldn't be more legal."

Despite this, he resigned Friday last week to avoid damaging the government’s reputation. Prime Minister Petr Fiala defended the ministry’s actions as legal and beneficial for citizens. Finance Minister Zbyněk Stanjura dismissed the idea of the government collapsing and called opposition demands “political theater.”

Other government members, like Agriculture Minister Marek Výborný, suggested returning the money or freezing it until more clarity is achieved. The Mayors and Independents party, part of the coalition, also wants all money frozen and even demanded an investigation into why the Justice Ministry didn’t inform the Financial Analysis Office before accepting the donation.

Opposition parties ANO and the Freedom and Direct Democracy party have called for the entire government to resign immediately. They say accepting bitcoin from a known criminal undermines the justice system and the state’s integrity. 

ANO’s leader Andrej Babiš accused the government of corruption and incompetence. "We are very strongly considering calling a no-confidence vote in the government," said ANO vice chair Karel Havlíček.

The opposition demands an urgent lower house session and is considering a no-confidence vote. They argue that even if the act wasn’t technically illegal, it shows “catastrophic judgment” and sets a dangerous precedent for state behavior.

The police and the National Headquarters for Combating Organized Crime are now investigating whether the donation came from laundered money. President Petr Pavel, who has historically been supportive of the current government, said Monday that there is no need for the government to resign this close to the October general election—though he said he needed “clear answers soon.”

Whatever the outcome of this scandal, which is still in its early days, this spells catastrophic news for the government’s election chances. With ANO already polling far ahead of the Spolu (Together) coalition parties, this will do nothing to increase the government’s popularity.

As political scientist Jan Kubáček told iDnes: “This is huge. This topic will drag on during the [election] campaign…a large part of disappointed voters will start considering not turning out to vote.”

Critics say it reflects a much deeper problem: how the Czech state handles corruption, transparency, and the rule of law. This is reflective of non-governmental organization Transparency International dropping Czechia five places in its 2024 Corruption Perceptions Index.

For residents of Czechia, the entire episode casts doubt on the accountability of public institutions, the reliability of the legal system, and the precedent it may set for future state-run deals involving cryptocurrency.