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Dutch Court Declares Knaken Crypto Exchange Bankrupt After $8M Missing
Rotterdam court declares Knaken insolvent after prosecutors say over $8M in customer funds vanished. Roughly 30,000 users may recover only a fraction of deposits.
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A Dutch court has declared the Knaken crypto exchange bankrupt after prosecutors said it failed to account for over $8 million in customer funds. The Rotterdam court ruled both Knaken Cryptohandel B.V. and its client-fund foundation insolvent on July 16, following a criminal probe into the missing money.
Prosecutors estimated that roughly 30,000 customers used the platform and may recover only a fraction of what they deposited. The court's ruling noted that Knaken customers have been shut out of the trading platform entirely and can no longer see their accounts or balances. The company simply does not have enough capital left to make everyone whole, the judges said.
Dutch authorities flagged suspicious activity at Knaken earlier last month. The Dutch Authority for the Financial Markets referred to the activities at the exchange as very concerning. The Public Prosecution Service petitioned for bankruptcy in late June after a criminal investigation into the missing funds.
The court ruled that Knaken has many customers and a significant cash deficit, of which the customers were never informed. The judges argued that declaring the exchange insolvent was the best option that served the public interests following the misappropriation of user funds.