What happened to michael in jail peaky blinders is one of the most intriguing plot points of the show. Michael was taken away from Polly by parish authorities when he was a child and raised by a family who didn’t want him involved with the darker side of the Shelby business but when Thomas Shelby visited his foster home Michael reunited with him. He then became a part of the Peaky Blinders and started out on the respectable side of their family business but eventually got drawn into the criminal element.
While on a mission to take over the opium business in Small Heath Michael betrayed Tommy by not telling him that the IRA was going after him. He also angered Tommy by losing huge profits at Shelby Company LT which strained their relationship. He then tried to leave Small Heath with his wife Gina but Tommy didn’t trust him.
However, Michael is now back in control of the opium operation. He’s a dangerous man with his sights set on Nelson. He’s currently blackmailing 'black cat' IRA informant Billy Grade into killing him. He’s probably hoping to get the money from the deal in return for a clean slate to start his life over.