Dutch prosecutors have sold cryptocurrency seized from Knaken, a collapsed Dutch crypto platform, raising $2.5 million (€2.2 million) for creditors.

Court-appointed trustee Carl Hamm said the trustee estimates customers put in between $12 million and $14 million (€10 million to €12 million), and that the sale proceeds are currently the only money in the estate — a sum equal to roughly a fifth of what customers are estimated to have put in.

A lawyer for one affected customer has questioned whether prosecutors were entitled to sell the holdings at all.

The Dutch Public Prosecution Service sold the cryptocurrency it seized from Knaken, according to Hamm, who is overseeing the bankruptcy estate. Knaken let customers in the Netherlands buy, trade, and store cryptocurrency through an app, but it operated without the license required by the country's markets regulator. The platform 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.

Hamm told local broadcaster Rijnmond that the sale proceeds are currently the only money in the bankruptcy estate. He has written to about 6,300 customers to temper expectations, and what, if anything, beyond the seized-crypto proceeds enters the estate will determine how much creditors can ultimately recover.

He said the shortfall has a structural explanation. According to Hamm, when a customer put €100 into Bitcoin, the customer paid Knaken €1 in fees and Knaken bought a €99 position on an exchange. That position belonged to Knaken. The customer's account showed an amount of crypto, but what the customer actually held was a claim to the euro equivalent, and many believed they owned the coins outright. Hamm also said Knaken does not appear to have held cryptocurrency matching those balances, with investments and running costs having "long ended up in one pot." That gap between what an app displays and what a customer legally holds has shaped earlier crypto platform failures as well: in the collapses of Mt. Gox and, more recently, FTX, customers similarly found that balances shown in their accounts amounted to claims in bankruptcy rather than coins they could withdraw. Customers who hold cryptocurrency in their own wallets, by contrast, control it directly rather than holding a claim against a platform.

"Whose crypto was it?"

A lawyer for one affected customer questioned whether prosecutors should have sold the holdings. "Whose crypto was it?" he asked Rijnmond, comparing the situation to the garage where your car is parked going bankrupt, "and your car is sold and you see nothing of it."

Prosecutors say they had good reasons for the sale but have declined to explain them. Rijnmond reported that they presumably relied on a provision allowing the sale of seized goods liable to lose value. Hamm said he understood the decision, given that "the value of cryptocurrency is completely unpredictable."

Trouble at Knaken began in 2020, when 23 BTC were stolen in a hack. Owner Ronald J. said the theft caused losses running to millions; at the time, the coins were worth about $162,000 (€140,000). He continued recruiting customers and signed sponsorship deals with Feyenoord, Sparta, Heracles, Heerenveen, and, briefly, Ajax. A customer using the pseudonym Henk told Rijnmond that the clubs' involvement had reassured him, calling it "really scandalous."

At the bankruptcy hearing, the court heard that Ronald J. had moved $2.7 million (€2.3 million) from Knaken to a company he controlled, a transaction the court described as a form of conflict of interest. Ronald J. said the company was set up for marketing work to keep functions separate, and he provided Rijnmond with years of records that the broadcaster reported showed no sign that he had enriched himself.

He does not accept the trustee's investment figure. Ronald J. says Knaken operated as a broker with every order logged at a liquidity provider, and he called the suggestion that money went uninvested "outright incorrect and damaging," while acknowledging that an uncovered portion existed.

Knaken did not report its problems to De Nederlandsche Bank. The central bank confirmed that its remit at the time covered money laundering and terrorist financing, while solvency was outside its scope. The case lands as EU oversight of crypto firms is broadening: under the Markets in Crypto-Assets Regulation, which has applied to crypto-asset service providers across the bloc since the end of 2024, firms face authorization and prudential requirements that go beyond the anti-money-laundering registration De Nederlandsche Bank oversaw.