Why Did The Court Force Knaken Into Bankruptcy?
A Rotterdam court has declared Dutch cryptocurrency platform Knaken Cryptohandel B.V. and its affiliated customer-payments foundation bankrupt after prosecutors said about €7 million in client assets could not be accounted for.
The court granted a bankruptcy petition filed by the Dutch Public Prosecution Service on June 30, finding that insolvency proceedings were needed in the public interest. Knaken had blocked customers from accessing its platform, accounts and balances while giving them insufficient information about the company’s financial position.
According to the court, Knaken has too few assets to repay customers in full. It also found a substantial gap between the assets held by the platform and the amounts owed to users. The ruling does not determine how the money disappeared or whether criminal offences occurred. Those questions remain part of a separate criminal investigation.
The court appointed C.F.W.A. Hamm as bankruptcy trustee to oversee an independent settlement of Knaken and Stichting Knaken Payments, the affiliated foundation used to hold customer funds.
What Triggered The Criminal Investigation?
Prosecutors opened a criminal investigation after receiving information that roughly €7 million belonging to Knaken customers was missing. They told the court that users had not been informed about the deficit and could not independently assess their losses because Knaken had shut down access to its trading platform.
The Public Prosecution Service also argued that customers were being discouraged from taking legal action and lacked enough information to decide whether they should file their own bankruptcy applications.
Knaken opposed the petition. The company said formal bankruptcy was not the best way to wind down the business and argued that customer interests were already protected through criminal-law measures, seized assets and its custody structure. It proposed an independent verification process and a repayment protocol run outside bankruptcy.
The court rejected that approach. It found that an independent trustee was necessary because customers could no longer access their accounts, the company had stopped making payments and there were serious doubts about whether Knaken could manage an orderly settlement itself.
Investor Takeaway
The Knaken case shows how quickly a custody structure can lose credibility when customers are locked out and the size of a shortfall is unclear. For crypto platforms, segregation of client assets is only as strong as the controls, reporting and access that support it.
Why Does The Payments Foundation Matter?
Customer funds were supposed to be held through Stichting Knaken Payments, a separate foundation designed to isolate user assets from the operating company. Such structures are commonly used in the Netherlands to separate client money from a company’s own balance sheet.
In principle, that setup should protect customer assets if the operating business fails. In practice, the court found that the foundation had not begun making repayments before the bankruptcy ruling. Knaken said distribution required legal and operational preparation, but the court concluded that both the company and the foundation needed to enter insolvency proceedings.
The trustee will now have to identify remaining assets, examine the relationship between Knaken and Stichting Knaken Payments, review customer claims and determine how much can ultimately be returned. Prosecutors estimate that Knaken had about 30,000 customers, meaning the insolvency could affect a large group of Dutch retail crypto users.
The Netherlands’ Fiscal Intelligence and Investigation Service raided Knaken in late June as part of the criminal investigation. Investigators seized computers, mobile phones and part of the company’s assets, according to Dutch media reports.
How Did MiCA Pressure Add To The Crisis?
Knaken stopped operating in early June after acknowledging that it had been unable to obtain the license required under the European Union’s Markets in Crypto-Assets Regulation, known as MiCA. The company said it had ceased all business activities because it could not secure the necessary authorization.
Customers were then locked out of the website, client portal and mobile app and could no longer access their cryptocurrencies.
Knaken had operated since 2017, allowing customers to buy, sell and exchange cryptocurrencies. It later raised its profile through sponsorship agreements with Dutch football clubs Ajax and Feyenoord. The platform had previously operated under the older Dutch registration system for crypto companies overseen by De Nederlandsche Bank, but that registration did not automatically convert into MiCA authorization.
From Dec. 30, 2024, crypto-asset service providers operating in the Netherlands were required to hold a MiCA authorization from the Dutch Authority for the Financial Markets or another European regulator. Companies already registered with the Dutch central bank were given a six-month transition period ending June 30, 2025.
Investor Takeaway
The case highlights the pressure MiCA is placing on smaller crypto platforms. Licensing failure, customer lockouts and missing client assets can quickly turn a regulatory problem into an insolvency and criminal-investigation risk.
What Happens Next For Customers?
The bankruptcy ruling does not resolve customer losses. It starts the process of determining what assets remain, how they are held and how claims should be treated between the operating company and the payments foundation.
Knaken does not appear in the AFM’s public register of authorized or notified crypto-asset service providers. The regulator states that absence from the register may mean a company does not require authorization, has an application under review or is providing regulated services without the required permission.
The court’s ruling establishes one immediate point: Knaken does not have enough available assets to repay all customers in full. For affected users, recovery will now depend on the trustee’s asset review, the outcome of the criminal investigation and the legal treatment of funds held through the affiliated foundation.
