A Dutch court declared cryptocurrency exchange Knaken bankrupt after prosecutors claimed it failed to account for more than $8 million in customer funds. The Knaken were declared bankrupt on 16 July, having previously sponsored Ajax and Feyenoord.
Rotterdam Court Announce Both Knaken Cryptohandel BV and its client fund organization have gone bankrupt. Prosecutors determined that more than $8 million in client funds belonging to more than 30,000 clients had disappeared without explanation. The Knaken store had already closed its doors earlier this month, and Dutch authorities raided the building to confiscate its assets.
Dutch authorities point to suspicious activities in Knaken
Dutch authorities reported suspicious activities at Knaken earlier last month. The Dutch Financial Markets Authority described the activities on the stock exchange as very worrying. As a result, the Public Prosecution File a petition It filed for bankruptcy in late June following a criminal investigation into the missing funds.
The court ruled that Knaken had numerous customers and a large cash deficit, which the customers were never informed of. The judges argued that declaring the exchange bankrupt was the best option that served public interests after embezzling users’ funds.
Prosecutors estimated that roughly 30,000 customers used the platform, and that they might only get back a small portion of what they deposited. The court to rule He noted that Knaken’s clients have been excluded from the trading platform completely and can no longer see their accounts or balances, and the company simply does not have enough capital to compensate everyone.
The stock market was reportedly struggling in the lead-up to this final blow: the bankruptcy ruling. Before that, the original app and website were shut down Dutch The authorities also raided the company’s headquarters and confiscated computers, phones, and part of the company’s assets.
Knaken reportedly asked authorities to postpone filing claims for damages after the lockdown, a move that did little to calm the nerves of customers who had already been banned from their properties.
Knaken defense refers to structural protection
Knaken’s defense argued in court that the exchange had a plan to protect customers in the event of such a scenario. According to the defense team, customer funds were supposed to be placed in a separate institution, Stichting Knaken Payments, which was set up so customers would not lose their money if the company failed.
However, the foundation never started paying anyone any money, with Knaken citing the need for careful legal and operational preparation first.
The court was not convinced by this interpretation and declared the commercial company and institution bankrupt in the same ruling.
The exchange rejected the bankruptcy filing, arguing that there were better ways to break up the business. The company asserted that clients’ interests were already protected by other criminal law actions, including assets seized by FIOD, and proposed simply distributing the available funds among its clients instead.
At the moment, the criminal investigation into where the €7 million went actually remains open, and thousands of former Knaken users are left waiting to find out how much, if any, will be returned to them through bankruptcy proceedings.
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