Knaken Has Been Declared Bankrupt. Investigators Say €7 Million Is Missing.

Dutch cryptocurrency platform Knaken has been declared bankrupt by a court in Rotterdam after prosecutors said approximately €7 million ($8.1 million) in customer funds could not be accounted for, leaving tens of thousands of users unable to access their accounts.

The ruling, issued Thursday, also placed Stichting Knaken Payments, the foundation established to safeguard customer deposits, into bankruptcy proceedings. The court said both entities lacked sufficient capital to fully reimburse customers.

The collapse marks one of the Netherlands' most significant crypto failures in recent years and comes as European regulators tighten oversight of digital asset companies under the European Union's Markets in Crypto-Assets (MiCA) framework. The developments also arrive amid increased scrutiny of financial crime and sanctions enforcement following ongoing geopolitical tensions and the use of digital assets in cross-border transactions linked to conflicts in Eastern Europe and the Middle East.

Knaken's website and mobile application have been inaccessible since early June, preventing customers from viewing balances or withdrawing funds. Dutch prosecutors estimate that around 30,000 customers have been affected, according to DutchNews.nl. The Dutch Public Prosecution Service requested the bankruptcy in June and has opened a parallel criminal investigation into the missing funds.

Investigators from the Fiscal Information and Investigation Service (FIOD) raided Knaken's offices in late June, seizing computers, mobile phones and a portion of the company's assets as part of the probe. Authorities have not announced any arrests.

Customer assets were intended to be held separately through Stichting Knaken Payments, a legal structure designed to protect client funds in the event of corporate insolvency. However, the foundation had not begun repaying customers before Thursday's ruling. Knaken previously stated that any reimbursement process would require additional legal and operational preparations.

Founded in 2017, Knaken offered services allowing customers to convert euros into cryptocurrencies, including Bitcoin and Ethereum, and trade digital assets through its platform. The company gained mainstream visibility in the Netherlands through sponsorship agreements with major Dutch football clubs, including Ajax and Feyenoord in 2021.

The company encountered regulatory difficulties this year after failing to secure a license required under MiCA rules. The European regulatory framework, which took full effect this month following a transition period, requires crypto firms operating within the European Union to obtain authorization from national regulators. Knaken was unable to secure approval from the Dutch Authority for the Financial Markets (AFM), according to Yahoo Finance, which first reported prosecutors' bankruptcy filing in June.

The case highlights the growing pressure facing smaller cryptocurrency firms as regulators across Europe move to implement stricter consumer protection standards. Several exchanges have either exited European markets or curtailed operations in recent months as compliance requirements have expanded, World Coin Index reported.

Knaken's bankruptcy also adds to a series of high-profile crypto failures over the past several years, including the collapses of FTX and Celsius, which prompted regulators worldwide to strengthen oversight of customer asset segregation and corporate governance practices.

A court-appointed trustee will now oversee the bankruptcy process and determine how remaining assets are distributed among creditors and affected customers, Phemex News reported. Dutch authorities have not disclosed how much of the missing €7 million, if any, has been recovered.