Dutch Prosecutors Sell $2.5M of Crypto From Bankrupt Platform Knaken

The Dutch Public Prosecution Service has sold the cryptocurrency it seized from Knaken, raising $2.5 million (€2.2 million) toward paying the collapsed platform's creditors, according to court-appointed trustee Carl Hamm.

Knaken let customers in the Netherlands buy, trade and store cryptocurrency through an app, operating without the license the country's markets regulator requires. It 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.

Dutch Prosecutors Seek to Bankrupt Crypto Platform Knaken After Funds Frozen

Hamm estimates customers put in $12 million to $14 million (€10 million to €12 million), and told local broadcaster Rijnmond the sale proceeds are currently the only money in the bankruptcy estate. He has written to about 6,300 customers telling them to temper expectations.

The gap has a structural explanation, since a customer putting €100 into Bitcoin paid Knaken €1 in fees and Knaken bought a €99 position on an exchange, Hamm said. That position belonged to Knaken. The customer's account showed an amount of crypto, while what they held was a right to the euro equivalent, and many believed they owned the coins outright. Knaken also appears not to have held cryptocurrency matching those balances, Hamm said, with investments and running costs having "long ended up in one pot."