Dutch Crypto Exchange Knaken Collapses, €7M Hole for Customers

Neither the court nor prosecutors have disclosed which assets remain or where they are held. Whether the ledger matches the foundation's records is unknown. Because both entities are bankrupt, the trustee must first establish those facts before an account entry can be connected to identifiable property or an accepted claim.

Knaken had not obtained the required AFM authorization, according to prosecutors. The Markets in Crypto-Assets Regulation, or MiCA, is now the benchmark for the safeguards that an authorized custody provider should operate under.

MiCA Article 70 requires authorized providers holding client crypto or access means to safeguard client ownership rights, especially in insolvency. Subject to institutional exceptions, eligible client funds must generally be placed in a separately identifiable account at a credit institution or central bank by the next business day.

MiCA Article 75 requires custody providers to maintain per-client position records and return procedures. Client holdings must be legally and operationally separate from the provider's own holdings so that properly custodied crypto remains beyond the reach of the provider's creditors in the event of insolvency. The regulation's official text describes preventive custody controls, not a mechanism for replacing assets that are no longer there.

The European Securities and Markets Authority, or ESMA, told unauthorized providers in June to stop onboarding clients, restrict remaining activity to an orderly exit, safeguard client interests, and explain how assets would be handled.

The operational risk has appeared in other MiCA exits: recent CryptoSlate reporting described AscendEX warning that some withdrawals might not be processed. Knaken is in a distinct and more advanced legal position because a court has found a coverage deficit and imposed bankruptcy control.

De Nederlandsche Bank says crypto-assets and crypto service providers fall outside the Dutch investor compensation scheme. Its deposit-guarantee guidance excludes crypto such as Bitcoin. Any treatment of cash actually held at a bank would depend on account ownership and structure, which have not been established for Knaken.

The first decisive signal will be a reconciled inventory: crypto and cash that the trustee can control or recover, matched against the two entities' records. A displayed customer balance is evidence of what the platform said it owed. Recovery depends on whether corresponding property can be found and linked to a legal right.

The foundation may have held some assets for customers, while the operating company may owe other obligations. The bankruptcy process must determine whether identifiable client property is outside a general creditor pool and whether shortfalls become claims against either estate. How accepted claims rank under Dutch insolvency rules will also be determined.

Investigators may hold property or information relevant to the estate. The court announcement does not establish what was seized and how it will be treated. Coordination between the trustee and criminal authorities will affect the evidence and assets available to the bankruptcy process without turning the insolvency case into a judgment on criminal liability.

Only after those questions are answered can the trustee produce a defensible estimate of what customers may receive and when.

For locked-out users, court control provides an independent way to distinguish an account balance from property that can actually be traced and returned. It replaces Knaken's proposed payout process with supervised accounting and a collective claims procedure.