Czech Ministry Faces Mounting Losses as Donated Bitcoins Remain frozen
Prague, Czech Republic – A substantial donation of Bitcoin, initially hailed as a windfall for the Czech Ministry of Justice, has become a financial and logistical headache, perhaps costing the state tens of millions of crowns and jeopardizing planned projects.The donation, valued at nearly a billion crowns upon receipt, is now largely unusable due too legal complications surrounding it’s origin and a court decision returning computers and data carriers containing the cryptocurrency to its original owner, businessman Petr Jiřikovský.
The saga began when minister of Justice Pavel Blažek accepted the Bitcoin donation in May, intending to allocate the funds to a range of initiatives including anti-drug measures in prisons, increased prison security, a house for women with young children, and the digitization of the justice system. Specific projects earmarked for funding included 150 million crowns for a women’s shelter, 72 million for the electronicization of public prosecutor’s offices, and 100 million for an electronic criminal file. Blažek also cited plans to support victims of crime, combat cybercrime, and provide affordable housing for Prison Service employees, totaling several hundred million crowns in planned investment.
However, the police swiftly moved to “freeze” Bitcoin transactions at the end of May, preventing the conversion of the cryptocurrency into customary currency. This action followed a court ruling that ordered the return of the computers and data carriers holding the Bitcoin to Jiřikovský, raising questions about the legitimacy of the donation and its potential status as proceeds of crime.
The situation has been further complicated by a previous attempt to sell the Bitcoin, which ultimately failed, forcing the ministry to repurchase the cryptocurrency from the buyers at a meaningful cost - tens of millions of crowns – just as Bitcoin’s value reached historic highs.
“The state is now holding hundreds of bitcoins that it received through a dubious and contested donation that it may never be able to monetize,” the report highlights.
Adding to the ministry’s woes, a superior has initiated disciplinary action against an unnamed official, alleging insufficient effort to prevent the court from returning the assets containing the Bitcoin to Jiřikovský.
The future of the donated Bitcoin remains uncertain. While initially acquired by the ministry, it is unclear if the state can legally claim ownership. The police currently consider the Bitcoin evidence in a criminal case and potentially subject to forfeiture. What was once touted as a near-billion-crown “success” has transformed into a problematic asset, leaving the Ministry of Justice facing substantial financial losses and stalled projects.
(With the contribution of Jiří Pšenička.)
