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kwned is a rarely used edition of the word owned and pwned.

In certain first person shooter games (namely Counter-Strike), players are equipped with a primary weapon, a secondary weapon, and a melee attack. In Counter-Strike (CS hence forth) players are given a knife. To "kwn" a person would be to own them with the knife.

Note that the K indeed stands for knife, and to use it in the context of being hit (such as in Halo) would be incorrect.
FatManMGS2 killed Noob with knife.

Noob: Darn!
FatManMGS2: kwned
by FatManMGS2 December 24, 2006
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