Dutch prosecutors liquidate $2.5M in crypto from bankrupt exchange Knaken; customers hold euro claims against the collapsed platform.
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Dutch prosecutors have liquidated $2.5 million in cryptocurrency seized from Knaken, a collapsed Dutch crypto platform, with proceeds directed toward creditors. Court-appointed trustee Carl Hamm stated that the sale generates the only funds currently available in the bankruptcy estate, while estimating customers deposited between $12 million and $14 million into the platform before it went offline in early June and was declared bankrupt on July 16.
The structural gap between customer deposits and recovered assets stems from how Knaken operated. When customers purchased cryptocurrency through the platform, Knaken retained ownership of the coins on an exchange while customers held only a claim to the euro equivalent, not the assets themselves. Knaken did not maintain cryptocurrency reserves matching stated customer balances, with funds reportedly consumed by investments and operational costs. Prosecutors justified the sale citing cryptocurrency's value volatility and provisions permitting disposal of seized goods at risk of depreciation.
A lawyer representing an affected customer has challenged the sale's legality, questioning whether prosecutors held authority to liquidate holdings without customer consent. The precise status of this legal dispute remains unresolved. Additionally, Ronald J., identified as Knaken's operator, disputes the trustee's characterization of the fund shortfall, maintaining the platform operated as a broker with all transactions logged at a liquidity provider and asserting the suggestion of uninvested capital is "outright incorrect."