Prosecutors Sell $2.5M Crypto From Bankrupt Knaken
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- Dutch prosecutors sold cryptocurrency seized from collapsed platform Knaken, raising $2.5 million (€2.2 million) toward paying creditors, according to court-appointed trustee Carl Hamm.
- Trustee Carl Hamm estimates customers deposited $12 million to $14 million (€10 million to €12 million) into Knaken and has written to roughly 6,300 customers telling them to temper expectations, since the sale proceeds are currently the only money in the bankruptcy estate.
- Knaken went offline in early June and a Rotterdam court declared it bankrupt on July 16 after prosecutors sought the winding-up in the public interest; the platform had operated without the license required by Dutch markets regulators.
- Hamm explained a structural gap in how the platform worked: a €100 Bitcoin purchase meant €1 in fees and Knaken bought a €99 position on an exchange that belonged to the platform, so customers held a right to the euro equivalent rather than the coins themselves, and Knaken appears not to have held crypto matching customer balances.
- A lawyer for one affected customer questioned whether prosecutors were entitled to sell the holdings at all, asking "whose crypto was it?"; prosecutors declined to state their reasons but Rijnmond reported they likely relied on a provision permitting sale of seized goods liable to lose value.
- Owner Ronald J. moved $2.7 million (€2.3 million) from Knaken to a company he controlled — a transaction the court described as a conflict of interest — and the platform's troubles trace back to a 2020 hack that stole 23 BTC, then worth about $162,000.
- De Nederlandsche Bank confirmed its remit at the time covered money laundering and terrorist financing only, with solvency outside its scope, and Knaken did not report its problems to the central bank.
Why it matters: Roughly 6,300 Knaken customers are likely to recover only a fraction of what they deposited, since $2.5 million in liquidated crypto is the only money in an estate against an estimated $12–14 million in customer funds. The case also highlights a custody gap: customers believed they owned crypto, but the platform's structure gave them a euro-denominated claim on a broker that apparently never held enough coins to match balances.
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