A Dutch court has declared cryptocurrency platform Knaken and its affiliated customer protection foundation bankrupt after authorities said the company could no longer safeguard client interests. The case centers on about €7 million in customer funds that investigators believe cannot currently be accounted for, leaving around 30,000 users unable to access their assets.

Court moves against Knaken

The Rotterdam District Court approved bankruptcy petitions for Knaken Cryptohandel BV and the foundation linked to the custody of customer funds. Prosecutors argued that the platform was no longer in a position to protect customers, prompting the court to place both entities into bankruptcy.

According to the reported findings, authorities believe roughly €7 million, or close to $8 million, has gone missing. At the same time, administrators have begun the liquidation process, while account holders remain locked out of the platform.

Why the case stands out

The collapse has drawn added attention because the affiliated foundation was meant to protect customer deposits if the company ran into financial trouble. Despite that structure, the reported shortfall still emerged, raising questions over how the funds were handled and what protections were actually available when the business came under stress.

The court also found that customers did not have enough information to take legal action on their own. Authorities further concluded that Knaken had stopped meeting its financial obligations after access to the platform was restricted.

Criminal investigation and recovery efforts

Dutch prosecutors have opened a criminal investigation into the disappearance of the money. The inquiry is expected to focus on what happened to the missing customer funds, while bankruptcy administrators oversee liquidation and assess what assets, if any, remain available for distribution.

Officials must now sort out claims from creditors and customers, but recovery efforts are more complicated because the bankrupt customer protection foundation was itself part of the structure intended to ring-fence client holdings.

From visibility to collapse

Before its failure, Knaken had built a public profile through sponsorship deals with major Dutch football clubs Ajax and Feyenoord. Those partnerships had given the company broad recognition, making its collapse and the investigation around missing customer funds more prominent.

The Knaken case adds to wider concerns around custodial crypto services, especially when customer access depends on a company’s internal controls and asset-segregation arrangements. In this instance, Dutch authorities are now trying to establish what became of the missing funds and how much, if anything, can be recovered for affected users.

Source: Coin Edition