Dutch Prosecutors Liquidate $2.5 Million in Seized Crypto From Failed Platform Knaken

A Dutch court-appointed trustee revealed that prosecutors have sold cryptocurrency seized from Knaken, an unlicensed crypto platform that shut down in early June 2026. The sale generated $2.5 million (€2.2 million) for creditors, but this recovery pales compared to the $12 to $14 million customers had deposited into the now-bankrupt platform before Knaken went offline.

Significant Customer Losses Expected

Hamm estimates that customers deposited between $12 million and $14 million (€10 million to €12 million) into Knaken before it went offline. The $2.5 million from the cryptocurrency sale now represents the only funds currently available in the platform’s bankruptcy estate. The trustee has informed approximately 6,300 affected customers to temper their expectations regarding potential recovery.

The underlying structural problem explains the massive shortfall. When customers purchased crypto through Knaken, the platform registered the digital assets in its own name rather than providing direct customer ownership. This meant a customer depositing funds received an account balance showing cryptocurrency holdings, but legally held only a contractual claim against the company for the euro equivalent of their purchase. Many customers believed they owned the coins outright, unaware of this critical distinction.

This arrangement left customers unsecured when Knaken collapsed. The company’s operating costs and investment losses had depleted customer funds over time, with records suggesting Knaken failed to maintain cryptocurrency reserves matching reported customer balances. Essentially, customer deposits were commingled with company operations rather than held in segregated custody.

Prosecutors’ Controversial Liquidation

Knaken had operated in the Netherlands without the license mandated by the country’s financial markets regulator. A Rotterdam court declared the platform bankrupt on July 16, 2026, after the Dutch Public Prosecution Service petitioned for its dissolution in the public interest. The prosecutors subsequently sold the seized cryptocurrency.

Some legal experts have challenged whether prosecutors possessed authority to liquidate the assets. One attorney representing an affected customer questioned the decision publicly, comparing it to a scenario where a car stored in a bankrupt garage gets sold while the owner receives nothing. The prosecutors have declined to publicly explain their reasoning, though reports suggest they relied on legal provisions permitting the sale of seized goods at risk of losing value—a particularly relevant justification given cryptocurrency price volatility.

Hamm indicated he understood the prosecutors’ rationale, acknowledging that the value of cryptocurrency is completely unpredictable, making the timing of any sale inherently uncertain.

Track Record of Problems

Knaken had experienced troubles even before its final collapse. In 2020, hackers stole 23 BTC from the platform, assets then valued at approximately $162,000 (€140,000). Despite this significant security breach, founder Ronald J. continued recruiting customers and secured sponsorship deals with multiple Dutch professional soccer clubs, including Feyenoord, Sparta, Heracles, Heerenveen, and Ajax.

During the bankruptcy hearing, the court uncovered that Ronald J. had transferred €2.3 million from Knaken to a company under his personal control—a transaction the court characterized as a conflict of interest that further compromised customer protections.

The Knaken collapse illustrates why proper licensing, segregated custody arrangements, and transparent ownership structures remain essential safeguards in the crypto industry. For the broader crypto market—and specifically for platforms seeking regulatory approval like those in the XRP ecosystem—this case underscores that institutional adoption hinges on transparent custody and compliance frameworks.

Source: Decrypt. Not financial advice.