BlockFills Entities File Bankruptcy After Withdrawals Halted, Court Froze Bitcoin
BlockFills, a crypto trading and liquidity provider operated by Reliz Ltd., has filed for Chapter 11 bankruptcy in Delaware along with three affiliated entities, aiming to restructure and seek new liquidity sources. The bankruptcy filing follows a lawsuit from creditor Dominion Capital, alleging that BlockFills misappropriated and commingled customer assets, concealed losses, suspended withdrawals, and used pooled client funds for company expenses, including crypto mining operations. BlockFills reportedly admitted to clients that this pooling caused a $77 million shortfall by the end of 2025. Dominion claims it held 70.5 BTC on the platform when withdrawals were halted and successfully obtained a federal court order freezing BlockFills' assets and requiring segregation of customer funds. Legal experts note the case echoes issues in the FTX collapse, highlighting risks when crypto venues mix company and client funds. They also emphasize the unsettled legal status of client crypto assets in bankruptcy, which may cause clients to be treated as unsecured creditors rather than asset owners, and note the potential for delays or exemptions on certain contractual claims due to bankruptcy proceedings.
