The Czech Republic is facing a scandal involving Justice Minister Pavel Blažek. After reports revealed that he received a donation of 480 bitcoins from a convicted darknet criminal, he is stepping down.

Sometimes the past has a long reach. At the end of May, the Czech Ministry of Justice boasted on Twitter that it had raised almost one billion crowns (about 40 million euros) by auctioning off bitcoins.

These revenues were intended to help digitize the judicial system—but shortly thereafter, they triggered a major scandal.

Media outlets reported that the 480 bitcoins auctioned off had been donated by Tomáš Jiřikovský—a cybercriminal who was apprehended back in 2016. Jiřikovský had operated the darknet marketplace Sheep Market, which took the lead in the darknet after the end of Silk Road in the fall of 2013, only for Jiřikovský to pull off an „exit scam“ a few months later.

Jiřikovský was sentenced to four years in prison in 2017 and was released in 2021. Since then, he has apparently been trying to recover the 1,500 bitcoins that were confiscated when he was arrested. He and his attorney claim that he acquired the bitcoins legally—while there is evidence linking them to Nucleus, another darknet marketplace.

Jiřikovský and his lawyer proposed to the Ministry of Justice that a third of the bitcoins be donated to the ministry. Justice Minister Blažek apparently accepted, with 480 bitcoins subsequently transferred to a wallet of the Ministry of Justice, while around 1,000 more bitcoins were moved to a separate wallet.

Blažek is now facing fierce criticism from the opposition and the press over the donation. Although he defends the donation as legal and useful—arguing that there is so far no proof of criminal origins of the funds—he resigned after increasing media pressure. Blažek explained that he did not want to damage the reputation of the government.

President Petr Fiala, himself known to be pro-Bitcoin, said he was convinced that Blažek had acted to the best of his knowledge and conscience. He praised the work of the justice minister in his administration.

Further investigations will examine the origins of the funds. The National Center for Combating Organized Crime is taking up the matter, and will also look into whether Blažek was guilty of money laundering by accepting the donation.