Dutch prosecutors seek bankruptcy for Knaken crypto platform, affecting 30,000 customers unable to access funds.
Bankruptcy Proceedings Launched Against Knaken
Dutch prosecutors have moved to initiate bankruptcy proceedings against the crypto exchange Knaken and its associated entity, Stichting Knaken Payments, citing the need to protect around 30,000 customers locked out of their funds. The request to declare the companies bankrupt was made to a Rotterdam court, emphasizing the public's interest.
Knaken has been inaccessible since June, with users unable to withdraw their assets. The platform facilitated euro-to-crypto exchanges and held digital assets but operated without the required license from the Dutch Authority for the Financial Markets (AFM), contrary to EU regulations.
While Knaken stated it is in the process of winding down, prosecutors have expressed doubts about the legitimacy and effectiveness of this process. Customers have reportedly been discouraged from filing claims for damages, heightening concerns over the platform's management.
Simultaneously, the Fiscal Information and Investigation Service (FIOD) is conducting a separate criminal investigation into Knaken, prompted by the AFM's alerts and a formal complaint. Recent operations led to the seizure of electronic devices and company assets, although no arrests have been made as of now.
Market Context and Future Implications
This situation comes at a critical time for crypto firms in Europe, as the Markets in Crypto-Assets (MiCA) regulations come into effect. Starting July 1, platforms lacking proper authorization will no longer be able to serve EU customers, narrowing the market significantly. Only about 200 firms have secured full licenses, and the Netherlands ended its grace period a year ago.
Knaken had attempted to enhance its visibility through partnerships with notable Dutch football clubs, but these sponsorships fell through prior to the platform's difficulties. In a recent report, Knaken disclosed its precarious financial situation, indicating significant vulnerabilities ahead.
