Dutch prosecutors have sold cryptocurrency seized from bankrupt crypto platform Knaken for approximately €2.2 million, with the proceeds expected to become part of the company’s bankruptcy estate.
The sale comes after Knaken was declared bankrupt by a Rotterdam court in July following concerns over the company’s financial position and its inability to provide customers access to their funds. The Dutch Public Prosecution Service had earlier requested the bankruptcy after receiving warnings from the country’s financial regulator, the Authority for the Financial Markets (AFM).
Knaken operated as a cryptocurrency trading platform where customers could convert euros into digital assets, trade cryptocurrencies and store their holdings. The platform went offline in early June, leaving customers unable to access their accounts and funds.
Dutch authorities subsequently launched investigations into the company. The Fiscal Information and Investigation Service (FIOD) conducted searches and seized digital devices and company assets as part of a separate criminal investigation into potential offenses. No arrests were reported at the time.
The bankruptcy proceedings followed concerns about a significant shortfall in customer funds. A Rotterdam court previously said there was a substantial deficit at Knaken and that customers had not been adequately informed about the situation. Dutch media reported that authorities estimated around €7 million in customer funds were missing.
Knaken had disputed the need for bankruptcy proceedings and argued that the company could instead wind down its operations and distribute available assets among customers. The court rejected that approach, citing insufficient funds to repay customers in full and the fact that users remained unable to access their balances.
The latest €2.2 million cryptocurrency sale provides funds that can now be handled through the bankruptcy process. However, the proceeds represent only a portion of the reported customer shortfall, meaning the sale alone is unlikely to fully compensate affected users.
Knaken’s financial difficulties also emerged amid tighter regulatory requirements for cryptocurrency businesses operating in the Netherlands. Under the European Union’s Markets in Crypto-Assets (MiCA) framework, crypto service providers are required to meet regulatory and licensing requirements to continue offering certain services.
The Dutch Public Prosecution Service had previously said Knaken did not obtain the required license and expressed concern about the way the company was attempting to wind down its operations. Authorities sought bankruptcy proceedings in what they described as being in the public interest and aimed at ensuring an orderly process for creditors and customers.
Knaken’s bankruptcy is now being handled by a court-appointed curator, who is responsible for assessing the company’s assets and liabilities and determining how available funds can be distributed among creditors.
The sale of the seized cryptocurrency marks another development in the ongoing bankruptcy case, while customers continue to await clarity on how much of their funds can ultimately be recovered.
