Millions invested, but only 2.2 million euros of crypto to share. The Dutch public prosecutor has sold the seized cryptocurrencies from Knaken, a platform declared bankrupt on July 16 by the Rotterdam court. According to the trustee Carl Hamm, this amount currently represents the only asset available to compensate creditors (6,300 former clients have been contacted). According to initial estimates, they had entrusted between 10 and 12 million euros to Knaken in the form of cryptocurrency investments, loans, or certificate purchases. The trustee << invites them to limit their hopes of reimbursement >>. It goes without saying that this euphemism does not please everyone.
Knaken allowed its users to buy, exchange, and hold cryptocurrencies through an app. However, the legal operation of the accounts did not necessarily correspond to what some clients thought they owned.
Carl Hamm gives the example of a 100-euro bitcoin purchase. After deducting one euro in fees, Knaken opened a position of 99 euros with an exchange platform. This position legally belonged to the company. The client could see a quantity of bitcoins appear in their account but only held a claim corresponding to their value in euros.
The trustee also suspects Knaken of not having held enough cryptocurrencies to cover all displayed balances. According to him, clients' investments and the company's current expenses may have been mixed, creating a significant deficit.
Ronald J., owner of Knaken, disputes this presentation. He claims that each order was executed and recorded with a liquidity provider. While he acknowledges the existence of an uncovered portion, he assures that the vast majority of positions corresponding to the approximately 145 cryptocurrencies offered were indeed << backed by real assets >>.
The public prosecutor's decision to sell the assets before the end of the procedure is now contested by a client's lawyer. He poses a central question: who really owned the seized cryptos?
He compares the situation to that of a bankrupt garage reselling a car entrusted by a client without directly returning the money. The public prosecutor claims to have had good reasons for proceeding with the sale, without detailing them publicly.
According to the media Rijnmond, prosecutors may have relied on Article 117 of the Dutch Code of Criminal Procedure. This allows for the sale of seized goods that may lose value. The trustee understands this decision given the volatility of cryptocurrencies. The sale protects creditors against a potential decline but also deprives them of any future increase.
Knaken's difficulties reportedly date back to a hack that occurred in 2020, during which 23 BTC were stolen. Despite this incident, the company continued its development and formed partnerships with several Dutch football clubs.
The procedure must now determine the exact origin of the deficit and the possible existence of other assets. For clients, the case serves as a reminder that a displayed crypto balance in an app does not guarantee direct ownership of the tokens or their actual availability. Between self-custody incidents and cases like this, it is hard to find an ideal solution for cautious investors.
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