The Dutch Public Prosecution Service completed a sale of cryptocurrency holdings confiscated from Knaken, a now-defunct cryptocurrency trading platform, generating $2.5 million (€2.2 million) to be distributed among the platform’s creditors. Court-appointed trustee Carl Hamm confirmed the transaction and noted that these proceeds currently represent the only funds available in the bankruptcy estate.
Knaken operated as a mobile application allowing customers in the Netherlands to purchase, trade, and store cryptocurrency without obtaining the license required by the country’s financial regulator. The platform ceased operations in early June, prompting prosecutors to petition for bankruptcy in the public interest. A Rotterdam court granted the bankruptcy petition on July 16.
Hamm indicated that customers had deposited between $12 million and $14 million (€10 million to €12 million) with the platform. He communicated with approximately 6,300 affected customers, cautioning them to maintain modest expectations regarding potential recovery. Hamm explained that the fee structure contributed to customer losses, with Knaken charging €1 on every €100 deposit while holding only €99 in actual cryptocurrency positions. Customers received account statements showing crypto holdings, but their actual claims were limited to euro equivalent values. According to Hamm’s assessment, the platform did not maintain cryptocurrency reserves matching the balances displayed to customers, with operational costs and investments having been commingled in accounts.
Prosecutors defended their decision to sell the seized holdings without providing specific justification, though reporting suggested they relied on legal provisions permitting the sale of seized assets at risk of value depreciation. Hamm acknowledged understanding the rationale, given cryptocurrency’s inherent price volatility. However, a legal representative for an affected customer challenged the appropriateness of the sale, questioning the ownership status of the holdings and comparing the situation to a bankrupt parking garage selling vehicles belonging to customers.
Platform founder Ronald J. faced scrutiny regarding a $2.7 million (€2.3 million) transfer to a company under his control, which the court characterized as a conflict of interest. Ronald J. stated the transfer was justified for marketing operations and provided documentation to support his account. He disputed the trustee’s characterization of uninvested customer funds, maintaining that Knaken operated as a broker with orders executed through liquidity providers.
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