A Rotterdam court has declared Dutch cryptocurrency exchange Knaken bankrupt after authorities uncovered a significant shortfall in customer funds. Investigators report that approximately €7 million in client assets went missing before the ruling, creating uncertainty for nearly 30,000 users locked out of their accounts. The decision follows several weeks of suspended services, blocked accounts, and mounting regulatory scrutiny.
Court finds major deficit in customer funds
Judges determined that Knaken’s assets were insufficient to fully compensate creditors. During bankruptcy proceedings, the court identified a notable deficit in customer funds and noted that users never received timely notification about the missing balances.
Prosecutors explained that in late June, they received a warning describing deteriorating conditions within the company. After reviewing internal documents, authorities requested bankruptcy protection to safeguard affected customers. Officials noted that platform users were unable to verify their account balances after access was suspended.
Judges found that by the time customers learned about the financial shortfall, Knaken had already blocked access to its digital platform. The court opted to place the company into formal bankruptcy proceedings, finding that an orderly shutdown outside court supervision would not better protect remaining assets.
During the proceedings, the court ruled out alternative proposals from company management, including a plan to distribute available funds to users outside standard bankruptcy measures.
Suspension of services and customer impact
Knaken halted its services in late May and early June, taking both its website and mobile application offline. Customers immediately lost access to their accounts and digital asset balances. During this period, company updates were limited, leaving users with minimal information about the evolving situation.
Company representatives argued that bankruptcy was not the most suitable path for winding down activities, suggesting a more direct repayment method. However, the court sided with prosecutors, stating that available assets fell far short of what was needed for full compensation.
Authorities estimate around 30,000 Knaken customers have been affected. Dutch prosecutors sought the bankruptcy decision in order to prioritize customer protection while investigations continue into the company’s financial records and operational practices.
Regulatory failures and ongoing investigation
European regulations require crypto exchanges to obtain a license under the Markets in Crypto-Assets (MiCA) framework to legally operate. Knaken failed to secure the necessary authorization and subsequently disappeared from the Dutch regulator’s official registry. This regulatory lapse coincided with rising operational difficulties and the eventual suspension of services.
Officers from the Fiscal Information and Investigation Service raided Knaken’s offices, seizing computers, mobile phones, and documents as part of a wider inquiry. Investigations are ongoing as authorities analyze company files and trace missing funds.
Mini dictionary: Markets in Crypto-Assets (MiCA): The MiCA framework is a set of regulatory standards implemented by the European Union that governs cryptocurrency activities, aiming to ensure transparency, stability, and consumer protection for digital asset service providers across member states.
| Criteria | Before Suspension | After Bankruptcy |
|---|---|---|
| Customer assets held | Approximately €7 million | Assets missing |
| User accounts | Active, accessible | Blocked, inaccessible |
| Regulatory status | Registered in Dutch crypto registry | Removed from registry |
