Summary
- The Dutch Public Prosecution Service has requested a Rotterdam court to declare Knaken bankrupt, citing "the public interest."
- Since early June, Knaken has been unavailable, impacting around 30,000 customers who cannot access their funds, and the platform operated without the necessary AFM license under EU regulations.
- A separate criminal inquiry by the FIOD resulted in searches and the seizure of devices and assets on Monday, although no arrests have been made thus far.
Prosecutors in the Netherlands are working to compel a bankrupt crypto platform to safeguard the interests of thousands of customers who are unable to access their funds.
The Public Prosecution Service sought a court ruling in Rotterdam to declare both Knaken Cryptohandel and its associated entity, Stichting Knaken Payments, bankrupt, emphasizing that this action serves "the public interest." Since early June, Knaken has been offline, affecting approximately 30,000 clients who are locked out of their assets.
This platform facilitated the exchange of euros for cryptocurrencies such as Bitcoin and Ethereum, along with trading and storage of digital assets, all of which necessitate a license from the Dutch financial regulatory body, AFM, in compliance with EU crypto legislation. Knaken did not secure such a license.
The company claims it has ceased operations and is in the process of winding down; however, prosecutors express significant concern that this process is not being conducted properly. Knaken has stopped disbursing funds to customers and has allegedly advised customers against submitting damage claims.
Following alerts from the AFM, prosecutors utilized their civil authority to initiate bankruptcy proceedings in the public interest. Should the court approve this request, a trustee appointed by the court would manage Knaken's assets and determine the distribution of returns to customers and other creditors. The prosecution service clarified that they will not influence how the trustee handles this process.
Concurrently, the Fiscal Information and Investigation Service (FIOD) is conducting a criminal investigation into potential offenses, triggered by signals from the AFM and a complaint from the regulator. On Monday, investigators executed searches, confiscating laptops, phones, and company assets, but no arrests have occurred. Prosecutors emphasized that civil and criminal cases are being managed by separate teams.
Crypto Firms Prepare for MiCA Regulations
This development occurs as Europe’s crypto licensing framework, MiCA, becomes more stringent. The transition period allowing firms to operate under previous national regulations concludes on July 1, after which platforms lacking authorization will be unable to legally service EU customers. Analysts predict this will narrow a market where only about 200 firms have obtained full licenses. The Netherlands ended its own grace period a year earlier.
Knaken had sought mainstream recognition through sponsorships with Dutch football clubs, including Ajax, Feyenoord, and Sparta Rotterdam. However, these relationships deteriorated prior to the platform's downfall: Ajax terminated its partnership after two months, and Feyenoord ended its collaboration last year. In its 2024 annual report, Knaken characterized itself as 'financially vulnerable,' according to Dutch public broadcaster NOS.