Tricky sentence, but I guess "The code is open source" refers to Andreas code, and not KnCwallet.
(no reference found on github for kncwallet)
There's nothing tricky about it. If they use any of Andreas' GPL sources, then their code is also GPL. KnCWallet by definition is open source and the sources must be released. Furthermore, the EULA they require is illegal for a GPL project.
Guess ur post on Andreas' thread, speeded up that moment and forced KnC to change their terms of service