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- The District Court of Rotterdam ruled that Knaken could no longer fulfill its obligations to customers.
- Dutch prosecutors intervened in public interest after the platform blocked users.
- The damage comes as MiCA’s licensing requirements are reshaping Europe’s crypto market.
- A similar investigation is the evaluation of potential financial irregularities.
Court Finds Property Deficiency of Millions of Euros
The District Court of Rotterdam has declared that Knaken Cryptohandel BV and its associated payment foundation, Stichting Knaken Payments, went bankrupt on July 16, with the firm having faced a serious crisis between customer loans and existing assets.
According to the decision, about €7 million ($8 million) in customer funds and digital assets cannot be accounted for. The court said that users were not informed about the downgrade of the platform before it suspended its services.
Bankruptcy oversees Knaken’s remaining assets, records and financial operations under an independent court, which will be responsible for verifying creditors and overseeing the liquidation process.
Attorney General Takes Unconventional Approach to Demand Refunds
Unlike most insolvency cases, the bankruptcy petition was filed by the Dutch Public Prosecutor’s office (Openbaar Ministerie) on behalf of the creditors or the company.
Critics said that public intervention was necessary after Knaken closed its trading platform, website and mobile phones, leaving customers unable to access the account information needed to protect their interests.
The court also criticized the company for preventing users from complying with the law when access to customer accounts was not available.
The prosecutor cited a number of factors that led to his intervention:
- About 30,000 customers lost access to the platform.
- Users were unable to verify account balance or history.
- Customers did not have sufficient information to initiate insolvency proceedings on their own.
- The court found that an independent trustee was required to ensure order.
MiCA Reveals Deep Problems
Knaken ceased operations at the beginning of June after failing to obtain a license under the European Union Market Crypto-Assets (MiCA) framework.
Under the new rules, crypto service providers operating in the Netherlands must obtain a license from the Dutch Authority for the Financial Markets (AFM). Without permission, Knaken suspended sales, a move that ultimately exposed the gap between customer responsibilities and existing products.
The company said the assets previously frozen by the government, along with its backup plan, would allow it to recover on its own. The court rejected that idea, saying that an independent bankrupt can protect the interests of creditors.
Criminal Investigation Continues
Bankruptcy proceedings are being carried out in parallel with criminal investigations led by the Dutch Fiscal Information and Investigation Service (FIOD).
Investigators have searched company premises and seized digital devices, business records and remaining company assets as part of an investigation into fraud, embezzlement or money laundering. No arrests have been made as of mid-July.
For customers, the most important thing is the claim process. A court-appointed administrator will set up a complaint process, but the €7 million guaranteed fine means that repayment depends on the value of the remaining assets and the outcome of the ongoing investigation, making repayment uncertain.
