Crypto trading platform Knaken declared bankrupt; €7 million in customer funds missing

The court in Rotterdam has declared the cryptocurrency platform Knaken bankrupt. The Public Prosecution Service (OM) had filed for bankruptcy in late June following signals from the Dutch Authority for the Financial Markets (AFM) regarding a “very concerning situation” at the crypto services provider. The OM had previously launched a criminal investigation, alleging that €7 million in funds belonging to Knaken customers are missing.

"Knaken has many customers, and there is a significant deficit in funds at Knaken, of which customers have not been informed. Consequently, a large amount of customer money has disappeared without it being clear how this could have happened,” the court said. According to the court, it is in the public interest to declare Knaken bankrupt.

At Knaken, people could convert money into cryptocurrencies and vice versa, and store their cryptocurrencies. The platform suddenly went offline early June and even asked customers not to file damage claims.

Knaken argued that bankruptcy was not the best way to wind down the company and the foundation. According to Knaken, customers’ interests are already protected by other criminal law measures, including assets seized by the FIOD, the Tax Authority’s investigative department.

Knaken proposed distributing the available funds among its customers. The judge rejected this idea because Knaken has insufficient funds to pay customers in full.