Dutch crypto platform Knaken declared bankrupt amid alleged €7 million customer fund shortfall

Dutch crypto exchange Knaken's operating company and affiliated client-fund foundation were declared bankrupt on July 16 by a Rotterdam court after prosecutors said about €7 million in customer money had disappeared and roughly 30,000 users were left facing only partial recovery. The ruling covers Knaken Cryptohandel B.V. and Stichting Knaken Payments, the foundation Knaken said was designed to protect client funds if the company failed. The court found customers had been locked out of the platform, could no longer view their balances, and had not been told about a significant cash shortfall. It rejected Knaken's argument that the business could be unwound outside bankruptcy and instead placed recovery into a court-supervised insolvency process. The case follows growing scrutiny from Dutch authorities. The Dutch Authority for the Financial Markets had described activity at Knaken as highly concerning, while the Public Prosecution Service sought bankruptcy after a criminal investigation into the missing funds. Dutch authorities had already raided the company's premises, seizing computers, phones and part of its assets after the platform and app were shut down. Knaken argued in court that customer interests were protected because funds were meant to be held in a separate foundation and because assets had already been seized by FIOD. The foundation, however, had not started repaying customers, citing legal and operational preparation. The court was not persuaded and found bankruptcy served the public interest after the apparent misappropriation of user funds. The criminal investigation into where the missing money went remains open while customers await clarity on how much, if anything, can be recovered through the insolvency proceedings.