A Rotterdam court has declared Dutch crypto exchange Knaken bankrupt after prosecutors alleged that about €7 million in customer funds had gone missing. The ruling follows weeks of disruption at the platform, which had already gone offline and left users unable to access their accounts.
Court points to customer fund shortfall
According to the court, Knaken had a significant deficit in customer assets and did not tell users about the gap. The court also said customers were not in a position to discover the problem on their own because access to the platform had already been blocked.
Prosecutors were alerted in late June to what was described as a “very concerning situation” at the company. They later alleged that roughly €7 million of customer money had vanished. The court ultimately concluded that the exchange did not have enough assets to repay creditors in full.
Company objections rejected
Knaken argued that bankruptcy was not the best route for winding down the business. The company instead proposed distributing whatever funds remained among customers. The court rejected that position and proceeded with the bankruptcy declaration.
The intervention came after Dutch authorities moved to protect customers. Prosecutors sought bankruptcy protection, while the Fiscal Information and Investigation Service, or FIOD, searched company premises and seized computers, mobile phones and other assets.
Rapid growth followed by shutdown
Founded in Rotterdam in 2017, Knaken presented itself as an accessible crypto broker supporting multiple digital assets. During the crypto bull market, the company expanded quickly, growing to about 45 employees and running high-profile marketing campaigns, including sponsorship agreements with Dutch Eredivisie football clubs.
Its position later weakened after the introduction of the European Union’s Markets in Crypto-Assets, or MiCA, framework. Knaken did not obtain the required license and was removed from the regulator’s crypto register, according to the source report.
In late May and early June, the company abruptly suspended operations. Its website and mobile app were taken offline, cutting customers off from their accounts and crypto holdings. Updates to users were brief and infrequent, and around 30,000 customers were affected.
A major Dutch crypto failure
The collapse is shaping up to be one of the most significant crypto failures in the Netherlands, based on the number of users affected and the scale of the alleged shortfall. The case now centers on what remains of the company’s assets and how customer claims will be handled through the bankruptcy process.
Source: u.today