Dutch Prosecutors Liquidate $2.5M in Crypto From Bankrupt Platform Knaken

Dutch prosecutors sold the seized cryptocurrencies from Knaken, a Dutch platform declared bankrupt on July 16 by a Rotterdam court, and raised $2.5 million (€2.2 million) to distribute among creditors.

The court-appointed trustee, Carl Hamm, estimates that customers had deposited between $12 million and $14 million in Knaken, making the proceeds from that sale the only asset available in the bankruptcy estate. Hamm wrote to some 6,300 customers asking them to temper their recovery expectations.

The gap between what was invested and what was recovered has a structural explanation. For every €100 in Bitcoin, Knaken charged €1 in commission and purchased a €99 position on an exchange in its own name. Customers saw a cryptocurrency balance in their account, but what they actually held was a euro-denominated claim against a company that operated without a regulatory license and that, according to Hamm, mixed investments and operating expenses in the same account for years.

The lawyer of one of the affected clients publicly questioned whether prosecutors had the authority to sell those assets, comparing the situation to a garage bankruptcy that liquidates its customers’ cars. Prosecutors confirmed that they acted under a provision that allows the sale of seized assets susceptible to losing value, without providing further details. Knaken, which had sponsored football clubs such as Feyenoord, Sparta and Ajax, never reported its difficulties to the Dutch central bank.

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