Dutch Prosecutors Move to Bankrupt Crypto Firm Knaken

Prosecutors Seek Bankruptcy for Collapsed Crypto Platform to Safeguard Customers

Dutch prosecutors are pursuing bankruptcy proceedings against a defunct cryptocurrency platform in an effort to protect tens of thousands of customers who have been locked out of their funds.

The Public Prosecution Service has formally requested a court in Rotterdam to declare Knaken Cryptohandel and its associated entity, Stichting Knaken Payments, bankrupt. Prosecutors described the move as being “in the public interest.” Knaken has been inaccessible since early June, leaving an estimated 30,000 users unable to access their digital assets.

The platform facilitated the exchange of euros for cryptocurrencies such as Bitcoin and Ethereum, alongside trading and storage of digital assets. These activities require a license from the Dutch financial markets regulator, the AFM, under European Union crypto regulations. Knaken had not obtained such authorization.

While the company claims to have ceased operations and is in the process of winding down, prosecutors have expressed “grave concern” that the process is not being managed in an orderly fashion. Knaken has reportedly stopped processing customer payouts and has advised users against filing damage claims.

Acting on alerts from the AFM, prosecutors have invoked their civil authority to petition for the company’s bankruptcy in the public interest. Should the court grant the request, a court-appointed administrator would assume control of Knaken’s assets and determine the distribution to customers and other creditors. The prosecution service has clarified that it will not be involved in the administrator’s handling of this process.

In parallel, the Fiscal Information and Investigation Service (FIOD) is conducting a criminal investigation into potential offenses. This probe was initiated following signals from the AFM and a formal complaint lodged by the regulator. On Monday, investigators executed searches, seized electronic devices including laptops and phones, and confiscated company assets. No arrests have been made to date. Prosecutors emphasized that the civil and criminal investigations are being handled by separate teams.

This development occurs as Europe’s comprehensive crypto licensing framework, MiCA, is being implemented. A transitional period allowing firms to operate under existing national rules is set to expire on July 1. After this date, platforms lacking proper authorization will no longer be legally permitted to serve EU customers. Analysts anticipate this regulatory tightening will significantly reduce the number of market participants, with only approximately 200 firms having secured full licenses thus far. The Netherlands concluded its own grace period a year ago.

Knaken had previously sought to establish a mainstream presence through sponsorships of Dutch football clubs, including Ajax, Feyenoord, and Sparta Rotterdam. However, these associations deteriorated well before the platform’s collapse. Ajax terminated its sponsorship after just two months, and Feyenoord ended its partnership last year. According to Dutch public broadcaster NOS, Knaken described itself as “financially vulnerable” in its 2024 annual accounts.