Dutch cryptocurrency platform Knaken has been declared bankrupt by a Rotterdam court after prosecutors said approximately €7 million ($8.1 million) in customer funds could not be accounted for. The ruling issued Thursday also placed Stichting Knaken Payments, the foundation established to safeguard customer deposits, into bankruptcy proceedings, with the court stating both entities lacked sufficient capital to fully reimburse customers. The collapse marks one of the Netherlands' most significant crypto failures in recent years and comes as European regulators tighten oversight of digital asset companies under the European Union's Markets in Crypto-Assets (MiCA) framework.
Rotterdam Court Issues Bankruptcy Ruling for Knaken and Payment Foundation
The Rotterdam court declared both Knaken and Stichting Knaken Payments bankrupt on Thursday. The Dutch Public Prosecution Service requested the bankruptcy in June and opened a parallel criminal investigation into the missing funds. The court determined that neither entity held sufficient capital to fully reimburse affected customers. Customer assets were intended to be held separately through Stichting Knaken Payments, a legal structure designed to protect client funds in the event of corporate insolvency. However, the foundation had not begun repaying customers before Thursday's ruling.
30,000 Customers Unable to Access Funds Since Early June
Knaken's website and mobile application have been inaccessible since early June, preventing customers from viewing balances or withdrawing funds. Dutch prosecutors estimate that around 30,000 customers have been affected, according to DutchNews.nl. Knaken previously stated that any reimbursement process would require additional legal and operational preparations. Founded in 2017, Knaken offered services allowing customers to convert euros into cryptocurrencies, including Bitcoin and Ethereum, and trade digital assets through its platform.
Knaken Failed to Secure MiCA License from Dutch Regulator
The company encountered regulatory difficulties this year after failing to secure a license required under MiCA rules. The European regulatory framework, which took full effect this month following a transition period, requires crypto firms operating within the European Union to obtain authorization from national regulators. Knaken was unable to secure approval from the Dutch Authority for the Financial Markets (AFM), according to Yahoo Finance, which first reported prosecutors' bankruptcy filing in June.
FIOD Raids Offices and Seizes Assets in Criminal Probe
Investigators from the Fiscal Information and Investigation Service (FIOD) raided Knaken's offices in late June, seizing computers, mobile phones and a portion of the company's assets as part of the probe. Authorities have not announced any arrests. Dutch authorities have not disclosed how much of the missing €7 million, if any, has been recovered.
Knaken Gained Visibility Through Football Club Sponsorships
The company gained mainstream visibility in the Netherlands through sponsorship agreements with major Dutch football clubs, including Ajax and Feyenoord in 2021. The case highlights the growing pressure facing smaller cryptocurrency firms as regulators across Europe move to implement stricter consumer protection standards. Several exchanges have either exited European markets or curtailed operations in recent months as compliance requirements have expanded, World Coin Index reported.
Court-Appointed Trustee to Oversee Asset Distribution
A court-appointed trustee will now oversee the bankruptcy process and determine how remaining assets are distributed among creditors and affected customers, Phemex News reported. Knaken's bankruptcy adds to a series of high-profile crypto failures over the past several years, including the collapses of FTX and Celsius, which prompted regulators worldwide to strengthen oversight of customer asset segregation and corporate governance practices.
FAQ
What caused Knaken to be declared bankrupt?
A Rotterdam court declared Knaken bankrupt on Thursday after prosecutors said approximately €7 million in customer funds could not be accounted for. The court stated that both Knaken and Stichting Knaken Payments lacked sufficient capital to fully reimburse customers.
How many customers are affected by the Knaken bankruptcy?
Dutch prosecutors estimate that around 30,000 customers have been affected. Knaken's website and mobile application have been inaccessible since early June, preventing customers from viewing balances or withdrawing funds.
Why did Knaken fail to continue operations?
Knaken encountered regulatory difficulties this year after failing to secure a license required under MiCA rules from the Dutch Authority for the Financial Markets (AFM). The European regulatory framework took full effect this month and requires crypto firms operating within the EU to obtain authorization from national regulators.
