Dutch crypto exchange Knaken has been declared bankrupt by a Rotterdam court after prosecutors reported a €7 million deficit in customer funds. The collapse affects 30,000 users, who are locked out of their accounts. A court-appointed trustee now controls the firm, and a separate criminal investigation is underway. The failure is linked to Knaken's inability to secure a license under the EU's new MiCA regulations.
Knaken bankruptcy ruling
▪Approximately 30,000 users have been affected by Knaken's collapse.
▪The court found Knaken had a "significant deficit" in customer funds and could not repay them in full.
▪In late May and early June, Knaken suspended operations, taking its website and app offline and blocking customer access.
▪The Dutch Public Prosecution Service reported to the court that approximately €7 million was missing from customer balances.
▪Founded in Rotterdam in 2017, Knaken grew to about 45 employees and sponsored Dutch Eredivisie football clubs.
▪The court rejected Knaken's own proposal to distribute available funds, instead appointing an outside trustee.
▪The Rotterdam District Court declared Dutch crypto exchange Knaken bankrupt on July 16.
Court-appointed trustee mandate
▪The trustee works for the collective body of creditors under a supervising judge.
▪Trustee C.F.W.A. Hamm now has authority over both Knaken Cryptohandel B.V. and its payments foundation, Stichting Knaken Payments.
▪The trustee must reconcile the exchange's platform ledgers with its wallets, bank accounts, and other property.
▪The trustee's mandate is to inventory assets, examine records, liquidate the estate, and propose distributions under Dutch bankruptcy law.
Criminal investigation
▪The Fiscal Intelligence and Investigation Service (FIOD) is conducting a criminal investigation into possible misconduct at Knaken.
▪The civil bankruptcy case and the criminal investigation are being handled by separate teams.
▪On June 29, FIOD investigators searched Knaken's premises and seized digital data carriers and company assets.
▪No arrests had been made in the criminal investigation as of a June 30 statement.
Custody structure vulnerabilities
▪The bankruptcy of Knaken's payments foundation, Stichting Knaken Payments, is central to customer recovery efforts.
▪Dutch law lacks an automatic statutory segregation regime for custodied crypto assets, unlike the protections for traditional securities.
MiCA regulatory framework
▪The MiCA framework requires authorized providers to legally and operationally separate client holdings from the provider's own assets.
▪Prosecutors stated Knaken had not obtained the required authorization from the Dutch Authority for the Financial Markets (AFM).
▪Knaken's financial problems were linked to the introduction of the European Union's Markets in Crypto-Assets (MiCA) regulation.
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