Dutch prosecutor sells Knaken crypto for €2.2M; customers face 80% loss

Prosecutors said they had valid reasons for selling the crypto declined to disclose them. Rijnmond reported that authorities were presumed to have relied on Dutch rules allowing seized property to be sold when it could lose value. Hamm said he understood why prosecutors converted the holdings into euros because "the value of cryptocurrency is completely unpredictable."

The sale fixed the value of the seized assets at €2.2 million. The trustee continues examining creditor claims, the company's records and whether other recoverable assets exist.

History of trouble

Knaken's financial trouble stretches back to 2020, when 23 BTC were stolen in a hack. Ronald J. said the incident ultimately cost the company millions. At Bitcoin prices at the time of the theft, the 23 BTC were worth about €140,000. Despite the loss, Knaken continued taking on customers and later entered sponsorship agreements with several Dutch football clubs, including Feyenoord, Sparta, Heracles and Heerenveen, as well as a short-lived arrangement with Ajax. One customer using the pseudonym Henk told Rijnmond that seeing established football clubs associated with Knaken had reassured him about the platform. He later described their involvement as "really scandalous."

Conflict of interest claim

The court heard that Ronald J. transferred about €2.3 million from Knaken to another company under his control. The arrangement was described as a potential conflict of interest. Ronald J. said the separate entity had been established to perform marketing work so that different business functions remained separated. He supplied Rijnmond with several years of financial records. The broadcaster said those records showed no evidence that he had personally enriched himself through the arrangement.

No license, no warning

Knaken had operated without the authorization required from the Dutch Authority for the Financial Markets for covered crypto services. The bankruptcy came shortly after the EU-wide MiCA transition ended on July 1. After that date, firms still serving customers under previous national arrangements generally needed authorization as crypto-asset service providers to continue offering regulated services. Other providers have continued to obtain approvals under the framework. In July, BitPay secured Dutch MiCA authorization from the AFM through its Netherlands subsidiary, allowing the company to provide covered services across the European Union under MiCA passporting rules.

Knaken did not report its financial difficulties to De Nederlandsche Bank before its collapse. The central bank told Rijnmond that its oversight of the company at the relevant time concerned anti-money laundering and terrorist-financing requirements, not whether Knaken remained solvent.

Separate from the licensing issue, Hamm continues examining how customer funds were handled and how much cryptocurrency Knaken actually held against account balances. Ronald J. maintains that customer orders were executed through the company's liquidity provider and says most positions were backed, while accepting that an uncovered portion existed.

For customers who put money into the platform, the gap between the €2.2 million available and the €10 million to €12 million in claims leaves little room for recovery.