Dutch prosecutors sold the cryptocurrency seized from collapsed platform Knaken for €2.2 million, or about $2.5 million, court-appointed trustee Carl Hamm said.Thousands of customers who deposited an estimated €10 million to €12 million could face heavy losses.The only money in the estate so farHamm, the Rotterdam trustee supervising the wind-down, said he is still looking to see if cash is elsewhere, if anyone owes Knaken money, and if other assets can be sold.Beyond the customers, he said, there are hardly any other creditors, aside from a possible slice of unpaid payroll tax.Hamm wrote to about 6,300 people who recently held a position with the firm. He warned them not to expect to get much back.His estimate that Knaken saw €10 million to €12 million from customers is more than the sale brought in, suggesting a hole of several million euros.In July, Cryptopolitan reported that prosecutors estimated the missing sum to be around €7 million and the customer base to be around 30,000 users.The app enabled people in the Netherlands to buy, trade, and store crypto. It never had the license required by the Dutch Authority for the Financial Markets.On July 16, a Rotterdam court declared Knaken Cryptohandel B.V. and its related Stichting Knaken Payments bankrupt.Hamm points out how the service was wired. Put €100 into Bitcoin, he said, and €1 went to Knaken as a fee while the firm used the remaining €99 to open a position on an exchange.That position was in the name of Knaken. Customers saw the balance of crypto increase in the app, but what they owned was a claim on the value in euros, not the coins. Many assumed the tokens belonged to them.Hamm said Knaken didn’t seem to have held crypto that matched the balances users were shown, and that trading and day-to-day costs had for a long time run into “one pot” while the business lost money.€2.3 million routed to the owner’s own companyOwner Ronald J. transferred €2.3 million from a company account to a company he controlled. The court called the transfer a conflict of interest.Those records trace Knaken’s troubles back to 2020, when 23 bitcoins were taken in a hack. J. blamed the theft for a loss of many millions of euros. The stolen coins were valued at ~€140,000 at 2020 prices.In the years that followed, the company signed up to sponsor football clubs, including Feyenoord, Sparta, Heracles, and Heerenveen, and briefly Ajax.It continued to sell certificates and let customers lend it money. It did not flag its financial problems to central bank supervisor De Nederlandsche Bank.One of the customers’ lawyers challenged the right of justice officials to liquidate the holdings. “Whose crypto was it?” he asked, likening it to a garage going bust and selling the car left parked there while the owner sees “nothing of it.”Prosecutors say there were good reasons for the sale and have refused to elaborate. They likely invoked Article 117 of the Dutch Code of Criminal Procedure, which provides for the sale of seized goods susceptible to depreciation.Crypto prices are volatile, Hamm said, and had the coins not been sold and then fallen, the shortfall would only have grown.Ronald J. said he does not acknowledge the €10 million to €12 million figure and cannot explain how it was arrived at.Knaken worked as a broker, he said. The customer entered a buy order, and it was filled at the going rate, and the matched position ended up in that customer’s account.He called Hamm’s suggestion that the money was never actually put into crypto “pertinent onjuist” and damaging.He added that every order went through the firm’s liquidity provider and had an order ID, an executed price, and a timestamp that could be checked against the customer’s instruction.J. also said he’s still working toward a settlement with creditors that he said could speed up the wind-down.A separate criminal investigation by Dutch fraud agency FIOD, which raided the premises on June 29 and seized devices and assets but made no arrests, remains open.Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.