Authorities launched an investigation in April, which prompted most of Poland's sports federations to call for Piesiewicz's resignation.
Police arrested the head of the Polish Olympic Committee on Thursday on suspicion that he took bribes from a crypto trader in return for sponsorship deals, officials said.
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Radosław Piesiewicz, who is considered close to Poland's nationalist right, is suspected of receiving kickbacks from Zondacrypto, which the government accuses of having links to nationalist opposition groups, organised crime and Russian intelligence services.
"Radosław Piesiewicz has been arrested," Poland's Sports Minister Jakub Rudnicki confirmed in a post on X.
"Such a person should never have been president of the Polish Olympic Committee...Piesiewicz has discredited Polish Olympics," he added.
Interior Minister Marcin Kierwinski described Piesiewicz as a "symbol of the extreme corruption plaguing the Olympic movement."
He said Piesiewicz's election as head of the Olympic committee had been backed by the former government, led by the nationalist Law and Justice (PiS) party.
Authorities launched an investigation in April, which prompted most of Poland's sports federations to call for Piesiewicz's resignation.
Crypto prizes for athletes
They said Piesiewicz was responsible for signing a sponsorship agreement for the Olympic committee with Zondacrypto, a crypto fund which has stopped trading.
Under the deal, Olympic medallists at the Winter Olympics in Milano-Cortina in February would be awarded prizes in cryptocurrency.
The payment of the bonuses was random at best.
The government estimates that Zondacrypto's disappearance caused 350 million zlotys (€80 million) in losses, with around 30,000 people falling victim to the company. The interior minister said that Zondacrypto was "in reality a Ponzi scheme."
Media reports said Piesiewicz received a watch worth some €40,000 from Zondacrypto chief Przemyslaw Kral. Piesiewicz has said he paid for the watch himself.
The reports said Kral was now cooperating with prosecutors in a bid to get a lighter sentence when he faces a trial.
Piesiewicz is one of many names cited by prosecutors in the Zondacrypto investigation.
Former justice minister and attorney general Zbigniew Ziobro has since fled to the United States, while his former deputy Marcin Romanowski is said to be in a pro-Russian separatist region of Moldova.
Prosecutors are also looking into Zondacrypto's links to the pro-nationalist Republika broadcaster.
President Karol Nawrocki, a nationalist elected in 2025, has blocked draft laws aiming to regulate the crypto market in Poland three times.
Prime Minister Donald Tusk, an opponent of Nawrocki, has told parliament that Zondacrypto's founder had "disappeared" and was "very probably" dead. He said the Zondacrypto scandal involved "Russian mafia" money.
The cryptocurrency was founded in 2014 by Sylwester Suszek who disappeared in 2022. His place as head of the company was taken by Kral.