BlockFills Fails Amid Asset Freeze and Commingled Assets Allegations

BlockFills, a cryptocurrency trading and liquidity provider, has filed for Chapter 11 bankruptcy in Delaware after halting client withdrawals. The move follows an asset freeze for 70 BTC earlier this month, which was ordered by a federal judge in New York.

The company's operator, Reliz Ltd., has filed for bankruptcy alongside three affiliated entities. BlockFills stated that the Chapter 11 process will allow them to restructure while working with clients, creditors, and investors to stabilize operations and explore additional sources of liquidity.

A lawsuit filed by Dominion Capital alleges that BlockFills misappropriated and commingled customer crypto assets, concealed losses, and refused to return funds. The company is accused of using pooled customer assets to cover company expenses and losses, including costs tied to crypto mining operations.