Crypto Lender BlockFills Files for Chapter 11 Bankruptcy

Crypto trading and lending firm BlockFills has filed for Chapter 11 bankruptcy after suspending client withdrawals, facing legal pressure, and reporting tens of millions in losses.

Key Takeaways

• BlockFills and its operator Reliz Ltd. filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware.
• The company reported assets between $50 million and $100 million and liabilities between $100 million and $500 million.
• A lawsuit from Dominion Capital alleges misuse and commingling of client crypto assets.
• The firm previously halted deposits and withdrawals in February due to liquidity challenges.

What Happened?

Chicago based crypto trading and lending firm BlockFills has entered Chapter 11 bankruptcy protection after weeks of financial turmoil and legal disputes involving client funds.

Reliz Ltd., the operator behind BlockFills, filed the voluntary bankruptcy petition in the U.S. Bankruptcy Court for the District of Delaware alongside three affiliated entities. The filing comes after the firm suspended customer withdrawals and faced allegations of misusing client assets.

BlockFills Files for Bankruptcy Protection

BlockFills confirmed that it filed for Chapter 11 after discussions with investors, clients, and creditors about the future of the business. The company said the restructuring process will help preserve value and improve recoveries for stakeholders.

In its official statement, the firm said:

The Chapter 11 process will allow the company to continue operating while pursuing restructuring plans, exploring strategic transactions, and seeking additional liquidity sources.

Liquidity Crisis and $75 Million Loss

The bankruptcy filing follows a period of mounting financial pressure for the firm.

BlockFills reportedly lost about $75 million and had been searching for potential buyers or emergency funding to stabilize the business. The firm previously halted client deposits and withdrawals in February, citing challenging market and financial conditions.

Court filings show that the company currently lists:

• Estimated assets between $50 million and $100 million.
• Estimated liabilities between $100 million and $500 million.

These figures highlight the scale of financial distress facing the institutional crypto trading firm.

Despite the current crisis, BlockFills had been a major player in institutional crypto markets. The company reported over $60 billion in trading volume during 2025, representing a 28 percent increase compared to the previous year.

The platform also served more than 2,000 institutional clients across over 95 countries, including hedge funds, asset managers, market makers, and mining companies.

Lawsuit and Asset Freeze Intensify Pressure

Legal challenges also played a major role in the company’s collapse.

Creditor Dominion Capital filed a lawsuit accusing BlockFills of misappropriating and commingling customer crypto assets while concealing significant losses. The lawsuit claims the firm refused to return millions of dollars in client funds stored on the platform.

Dominion alleged that BlockFills pooled customer assets with company funds on a single balance sheet, creating a balance sheet shortfall of roughly $77 million by the end of 2025.

According to the complaint, those pooled assets were allegedly used to cover company expenses, including crypto mining operations, equipment purchases, and settlements with other crypto firms.

Earlier this month, a U.S. federal judge in New York issued a temporary restraining order that froze Bitcoin linked to the dispute, including about 70.5 BTC held on the platform, valued at approximately $4.8 million at the time.

The court also ordered the firm to account for and segregate customer funds while the legal case proceeds.

Leadership Changes and Investor Backing

The turmoil also led to leadership changes at the firm. BlockFills co-founder and CEO Nicholas Hammer stepped down, with Joseph Perry serving as interim CEO.

The company previously attracted backing from several major institutional investors including Susquehanna Private Equity Investments, CME Ventures, Simplex Ventures, C6E, and Nexo Inc.

BlockFills built its reputation by offering liquidity provision, crypto lending and borrowing, derivatives trading, and over the counter execution services for institutional clients.

CoinLaw’s Takeaway

In my experience covering crypto markets, bankruptcies like this often reveal deeper structural problems around custody and risk management. What stands out in the BlockFills case is the allegation that client assets were pooled with company funds. That practice creates serious transparency risks for institutional clients.

I believe this case could become another important legal test for how customer crypto assets are treated during bankruptcy proceedings. If courts begin enforcing stricter separation requirements, it could push the industry toward stronger custody standards.

For institutional crypto lending platforms, trust and asset segregation are everything, and once that trust breaks, recovery becomes extremely difficult.

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