Just in case you haven't heard about a custodian stealing everyone's money lately, here's a Dutch exchange that went belly up and doesn't have the coins:
Knaken customers have been locked out of the trading platform and cannot reach their accounts or balances, the court said in its ruling. It found that the company has too little capital to repay customers in full.
Prosecutors estimate the platform has around 30,000 customers, broadcaster NOS reported. The app and website went dark just over a month ago, and the fraud investigation service FIOD raided the company in late June, seizing computers, phones and part of its assets.
They had some fancy customer funds foundation, but:
Customer money was meant to sit in a separate foundation, Stichting Knaken Payments, set up so that clients would not lose their funds if the company failed.
The foundation had not begun paying out, which Knaken said needed careful legal and operational preparation. The court declared both the company and the foundation bankrupt.
In this case, I have a little sympathy though: it seems like MiCA broke the exchange's back.
Founded in 2017, Knaken let customers convert money into cryptocurrencies and trade them, and became a shirt sponsor of Ajax and Feyenoord in 2021. It ran into trouble this year when new European rules required crypto firms to hold a licence, which it was unable to obtain.
MiCA doesn't magically make you spend customer funds?
Certainly not. But I am a simple minded person, and when I am told that the problem may be a scammer or a government, I usually default to blaming the government (because I am far more scared of the government than I am the scammer).
Fair enough. How would this go differently in a more anarchist society / voluntaryism where the exchange still spent the funds that they said were safely sitting in a foundation?
As someone from the Netherlands, it’s strange to see Knaken end this way. A few years ago they were sponsoring Ajax and Feyenoord and looked like a success story.
Bitcoin doesn’t fail here custodians do. Another reminder that the safest place for your bitcoin is in your own wallet.
Hard lesson, but we've seen it too many times already.
Every few months it's the same story. Self custody keeps looking better.
That's a rough one for everyone who trusted them.
Stuff like this is why I sleep better holding my own keys.
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