Dutch prosecutors have sold cryptocurrency seized from collapsed trading platform Knaken, generating approximately €2.2 million ($2.5 million) for its bankruptcy estate.
Court-appointed trustee Carl Hamm estimates customers deposited between €10 million and €12 million ($12 million to $14 million) with the platform. The €2.2 million recovered from the crypto sale is currently the only money available in the estate, leaving a wide gap between customer claims and recoverable assets.
A central issue is how Knaken structured customer holdings. According to the trustee, crypto purchased through the platform was held in Knaken’s name. Customers saw crypto balances in their accounts but legally held claims for the euro value rather than direct ownership of the underlying coins. Hamm also said the platform appears not to have maintained enough crypto to fully match customer balances.
That distinction is now being challenged. A lawyer representing an affected customer has questioned whether prosecutors had the authority to sell the seized crypto if customers believed those assets belonged to them.
Knaken was declared bankrupt on July 16 after operating without the required Dutch market licence. Its financial problems stretch back further, including a 23 BTC theft in 2020 and allegations raised during bankruptcy proceedings over a €2.3 million transfer to a company controlled by owner Ronald J. He disputes claims that customer money went uninvested and says the company operated as a broker with orders recorded through liquidity providers.
Intelligence Finding
Knaken’s collapse exposes a custody risk that can remain hidden until a platform fails: an account balance does not necessarily prove ownership of the underlying crypto.
For customers, that distinction is now worth millions. If their holdings are treated as unsecured euro claims rather than segregated crypto assets, they must compete with other creditors for a bankruptcy estate currently holding only a fraction of estimated deposits.
The next issue is legal rather than technical. Any challenge to the prosecutors’ sale, and the eventual classification of customer claims, will determine who has the strongest claim to the remaining €2.2 million.
