WARSAW — The troubles of a cryptocurrency firm that sponsored one of America’s flagship conservative gatherings are turning into a major political battle in Poland.
The exchange, Zondacrypto, is under investigation by Polish prosecutors over what they say are at least 350 million złoty (€82.5 million) in potential losses caused by misleading clients; while the exchange’s boss, Przemysław Kral, is now in Israel. He says he is innocent and that Zondacrypto is still solvent.
The broader effort to regulate crypto — and the Zondacrypto fiasco specifically — is currently pitting pro-EU Prime Minister Donald Tusk against nationalist President Karol Nawrocki and his supporters in the opposition Law and Justice (PiS) party. The fight is part of a wider political battle ahead of next year’s parliamentary election, where Tusk’s center-right liberal Civic Coalition is in the lead, but could still lose power to a coalition of right-wing parties.
It’s also entangling the U.S. Zondacrypto sponsored last year’s Polish edition of the Conservative Political Action Conference, known as CPAC, where President Donald Trump’s former homeland security secretary, Kristi Noem, endorsed Nawrocki ahead of the Polish presidential election.
Tusk’s government has seized on the scandal to push long-stalled EU-backed crypto rules, while the opposition is fighting back against what it sees as a politicized crackdown.
The prime minister — who is in a long-running political fight with Nawrocki — has tied the exchange to the president twice vetoing legislation implementing the EU’s Markets in Crypto-Assets (MiCA) regulation, which sets industry standards and investor safeguards for crypto assets and companies that service them.
Nawrocki responded last month by telling Kanał Zero, a popular online news service, that the Tusk government risked crippling the crypto market by regulatory overreach.
“The government is failing to protect the interests of Polish citizens. As a result, it wants to drive the entire cryptocurrency market out of Poland with a blunt approach, including those who operate honestly and do not deceive people. That does not solve any problem,” Nawrocki said.
Zbigniew Bogucki, the head of Nawrocki’s office, said the president was not opposed to regulating crypto, but had problems with what he called the “flawed regulatory model” proposed by the government.
A widening battle
But Tusk is using the investigation into the crypto exchange as a political weapon against his opponents, alleging — without providing public evidence — that Zondacrypto was built with “Russian money,” an explosive charge in Poland. He said Zondacrypto’s ties to the political right are undermining efforts to better regulate crypto, although the exchange is now registered in Estonia, which has already incorporated the EU’s MiCA regulation.
“The cryptocurrency market and, more broadly, the cryptoassets market, must be subject to regulation. Otherwise, it will be open to scammers and fraudsters, and there’s going to be complete chaos,” Finance Minister Andrzej Domański told POLITICO.
In a social media comment, Kral denounced what he called “politically motivated attacks on our exchange.” He also insisted that his company was solvent and rejected accusations that it had been drained of assets.
“Attempts to drag me and Zondacrypto into current political squabbles are as absurd as they are harmful to the Polish innovation market,” he said.
Zondacrypto has been closely tied to conservative political activities.
“What we do know is that Zondacrypto financed various activities on the right side of the political scene, including the CPAC event in Poland,” Domański said.
The Sovereign Poland Institute, a foundation linked to former Justice Minister Zbigniew Ziobro, admitted in April that it received 450,000 złoty from Kral. However, it insisted that it had not asked Kral for the donation.
Zondacrypto is also a large sponsor of the Polish Olympic Committee.
The Regional Prosecutor’s Office in Katowice said in a statement on April 17 that it launched an investigation into Zondacrypto “on the basis of complaints filed by injured parties and media reports pointing to problems with withdrawals of funds held on the Zondacrypto platform.”
Zondacrypto is one of the largest crypto exchanges in Central Europe and allowed investors to trade in more than 150 cryptocurrencies. Prosecutors said that the exchange’s clients were misled about their ability to buy and safely store both traditional money and cryptocurrencies on the exchange, leading them to make financial decisions that resulted in losses.
The Russian angle
Tusk alleges that it’s more than a regulatory problem. He laid out his arguments in a closed-door session of parliament, and then said publicly: “The company’s financial success stems not only from Russian money linked to the so-called Bratva — one of Russia’s most powerful mafia groups — but also from Russian intelligence agencies.”
Zondacrypto did not respond to a request for comment.
While prosecutors try to build their case against the exchange, investors are turning to lawyers for help.
“Several dozen people have contacted my firm so far and new ones are coming in every day. Individual losses range from several thousand złoty to seven-figure amounts,” Robert Nogacki, managing partner and founder of Skarbiec, a law firm that is handling complaints from Zondacrypto clients, told POLITICO.
Zondacrypto’s growing problems are prompting right-wing politicians to cut themselves off from the firm.
Jarosław Kaczyński, the leader of PiS, said last week that Tusk’s accusations are “an attempt to pin the blame for the cryptocurrency scandal on Law and Justice. Our party has absolutely nothing to do with this.”
He added: “I am a firm supporter of a complete ban on cryptocurrencies. And, of course, I will support such a law.”
Kaczyński also rejected claims that PiS-linked groups had received money from Zondacrypto.
Leaders of the far-right Confederation party, which is strongly pro-crypto, are trying to distance themselves from Zondacrypto, while also attacking Tusk.
Krszysztof Bosak, one of the party’s leaders, called on Tusk to make public the accusations he made against Zondacrypto during the closed session of parliament. He also questioned the need for crypto regulation.
“I still believe that the government should not regulate the cryptocurrency market,” he said last week. “It lacks the tools to do so, and it goes against the very nature of the cryptocurrency market.”
A runaway tycoon and millions in crypto: Polish scandal stokes Tusk-Nawrocki fight
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