Dutch cryptocurrency exchange Knaken has been declared bankrupt by a court in the Netherlands after prosecutors alleged that approximately 7 million euros in customer funds had gone missing, according to local reports.
Knaken, which had operated as a registered crypto service provider under the Dutch central bank, had been under investigation by financial authorities for several months prior to the bankruptcy ruling. The company reportedly faced liquidity issues in the weeks leading up to the declaration, with users reporting withdrawal delays and communication breakdowns.
Dutch prosecutors said during court proceedings that roughly 7 million euros in customer assets deposited on the platform could not be accounted for. The missing funds raise questions about whether the exchange was operating with proper segregation of client assets, a standard requirement under the Netherlands’ regulatory framework for crypto service providers.
The bankruptcy is the latest in a series of exchange failures across Europe, though Knaken’s regulated status makes it an unusual case. Most Dutch crypto exchanges are required to register with De Nederlandsche Bank and undergo anti-money laundering checks, though the regulatory framework does not impose the same capital and custody requirements applied to traditional financial institutions.
Customers of the exchange are now expected to file claims through the bankruptcy trustee, though recovery of funds is far from guaranteed. Insolvency proceedings for crypto firms present unique challenges, as the decentralized and pseudonymous nature of blockchain transactions can complicate asset tracing.
The collapse adds to a growing list of European crypto trading platforms that have failed in recent years, including FTX Europe and various smaller exchanges. European regulators have been working on stricter rules for crypto asset service providers under the Markets in Crypto-Assets Regulation framework, with full implementation scheduled by 2028.
This article was adapted from U.Today. Read the original here.
