TLDR
- A Rotterdam court declared Knaken bankrupt after identifying a significant deficit in customer funds.
- Prosecutors alleged that about €7 million in customer assets had disappeared from the Dutch cryptocurrency exchange.
- Approximately 30,000 customers lost access to their accounts after the website and mobile application went offline.
- The court rejected Knaken’s proposal to distribute available funds outside formal bankruptcy proceedings.
- Knaken failed to obtain the required MiCA authorization and disappeared from the Dutch regulator’s crypto register.
A Rotterdam court declared Knaken bankrupt after finding a major shortfall in customer funds. Prosecutors said about €7 million belonging to customers had disappeared before the ruling. The decision follows weeks of suspended services, blocked accounts, and growing regulatory intervention.
Court Finds Customer Fund Deficit
The Rotterdam court ruled Knaken lacked enough assets to repay creditors fully. Judges found a significant deficit in customer funds during bankruptcy proceedings. The court also said customers never received timely notice about the missing balances.
Prosecutors received a warning during late June describing a very concerning situation inside the company. Authorities then reviewed available information before requesting bankruptcy protection for affected customers. Officials said platform users could not independently verify their balances after access became unavailable.
The court stated Knaken had already blocked access to its platform before customers learned about the financial shortfall. Judges rejected arguments that an orderly shutdown would better protect remaining assets. The ruling instead placed the company into formal bankruptcy proceedings under court supervision.
Operations Halted Before Bankruptcy
The exchange suspended operations during late May and early June while its website and mobile application became unavailable. Knaken customers immediately lost access to accounts and cryptocurrency holdings stored through the platform. Users then relied on limited company updates while waiting for official action.
Company representatives argued bankruptcy was not the most suitable method for ending operations. They proposed distributing available funds among customers through an alternative process. However, the court determined available assets remained insufficient for full creditor repayment.
Authorities estimate about 30,000 users were affected after Knaken stopped providing access to its services. Dutch prosecutors sought bankruptcy measures designed to protect customer interests during the unfolding case. Meanwhile, investigators expanded inquiries into the company’s financial position and operational records.
Regulatory Pressure and Investigation Continue
European cryptocurrency rules required exchanges to obtain authorization under the Markets in Crypto-Assets framework before continuing operations. Knaken failed to secure the necessary license and disappeared from the national regulatory register. The regulatory change coincided with mounting operational difficulties before services stopped.
The Fiscal Information and Investigation Service searched company premises during the investigation. Officers seized computers, mobile phones, and other assets while collecting evidence. Knaken remains subject to those investigative actions as authorities continue reviewing company records.
