$2.5M in Cryptocurrency Sold by Dutch Prosecutors from Bankrupt Knaken

Dutch prosecutors have made $2.5 million from selling cryptocurrency seized from Knaken, a bankrupt platform that allowed customers in the Netherlands to buy and trade cryptocurrencies through an app.

Knaken failed to obtain the necessary license from the country's markets regulator and went offline in June, with a Rotterdam court declaring it bankrupt on July 16. The Dutch Public Prosecution Service had sought the winding-up of Knaken due to public interest.

According to court-appointed trustee Carl Hamm, customers put in between $12 million to $14 million, but the sale proceeds are currently the only money in the bankruptcy estate. Hamm has estimated that customers were initially under the impression they owned the cryptocurrency outright, when in fact their accounts showed an amount of crypto equivalent to a right to the euro value.

A lawyer for one affected customer questioned whether prosecutors should have sold the holdings, asking 'Whose crypto was it?' and comparing it to a car being sold after its owner's garage goes bankrupt. Prosecutors declined to give reasons for their decision but relied on a provision permitting the sale of seized goods liable to lose value.