BlockFills: Crypto Brokerage Files Chapter 11 After Customer Fund Freeze and Misappropriation Lawsuit

Reliz Technology Group Holdings Inc., the parent company of cryptocurrency brokerage BlockFills, filed for chapter 11 protection in the District of Delaware on March 15, 2026 after counterparty losses, a customer fund misappropriation lawsuit, and a February 2026 crypto market downturn left the firm unable to return client assets. The four debtor entities — Reliz Technology Group Holdings, Reliz Technologies LLC, Reliz Ltd. (d/b/a BlockFills), and Reliz CI Ltd. — reported estimated assets of $50 million to $100 million against liabilities of $100 million to $500 million. BlockFills suspended all customer deposits and withdrawals on February 11, 2026 and has not restored access.

The filing was precipitated by a federal court order freezing approximately 70.6 Bitcoin and directing the firm to segregate customer assets after Dominion Capital LLC alleged that BlockFills had misappropriated and commingled client crypto holdings. The debtors are pursuing a "NewCo" restructuring transaction negotiated with an ad hoc group of customers represented by Cleary Gottlieb Steen & Hamilton LLP.

Debtor(s)	Reliz Technology Group Holdings Inc. (4 entities)
D/B/A	BlockFills
Court	U.S. Bankruptcy Court, District of Delaware
Case Number	26-10371
Petition Date	March 15, 2026
Judge	Hon. Thomas M. Horan
Estimated Assets	$50 million to $100 million
Estimated Liabilities	$100 million to $500 million
General Unsecured Debt	~$145 million
Employees	14 full-time
Claims Agent	Verita Global, LLC

BlockFills Platform and Equity Holders

BlockFills is a Chicago-based institutional digital asset brokerage founded in 2017. The firm provided cryptocurrency trading, derivatives, collateralized lending, and mining services exclusively to institutional clients — professional traders, hedge funds, high-net-worth individuals, and large-scale Bitcoin mining operations. In 2025, the platform processed over $61 billion in trading volume. Operations spanned multiple jurisdictions through entities in the United States, the Cayman Islands, and formerly Dubai. At the petition date, BlockFills employed 14 full-time salaried staff.

Equity holders include K&H Crypto LLC (17%), P3K LLC (9%), Susquehanna Private Equity Investments LLLP (5%), Simplex Holdings LLC (2%), CME Ventures — the venture arm of CME Group — (2%), and Nexo Inc. (2%).

Counterparty Losses and Liquidity Crisis

The First Day Declaration filed by Mark Renzi of Berkeley Research Group details compounding losses over two years:

Babel Finance ($8.5 million). BlockFills had approximately $8.5 million in assets tied up in the Babel Finance bankruptcy, a Hong Kong-based crypto lender that collapsed in 2022. These funds remain frozen.

AEXA equipment loan ($12 million). A failed equipment loan to AEXA Digital Infrastructure — a Bitcoin mining operation — resulted in a $12 million settlement obligation to Nexo Capital Inc. in late 2024.

Celsius arbitration ($4.8 million secured claim). Following an arbitration proceeding, Celsius Network obtained a secured claim of approximately $4.8 million in promissory notes bearing 12% annual interest, secured by substantially all debtor assets. The debtors assert that Celsius is significantly overcollateralized, with approximately $30 million in collateral value supporting the $4.8 million claim.

February 2026 market downturn. A broad cryptocurrency market decline in February 2026 compounded the liquidity crisis. On February 11, 2026, BlockFills suspended all customer deposits and withdrawals, initially characterizing the halt as temporary. Clients could still open and close positions but could not move funds off the platform. The board of directors unanimously approved the bankruptcy petition on March 9, 2026 after earlier attempts to find a buyer or secure new capital failed.

Dominion Capital Lawsuit and TRO Orders

The most consequential pre-petition development was a lawsuit filed by Dominion Capital LLC on February 27, 2026 alleging that BlockFills misappropriated and improperly retained millions of dollars in customer crypto assets, commingled client funds with corporate assets, concealed losses, and refused to return client assets after suspending withdrawals. A federal judge imposed a temporary restraining order freezing approximately 70.6 Bitcoin belonging to Dominion and ordering BlockFills to segregate and account for all customer assets. A second customer action also resulted in a TRO restricting operations.

If customer crypto was commingled with corporate assets rather than held in segregated accounts, those customers may be treated as general unsecured creditors rather than receiving return of identifiable property under section 541(d).

Capital Structure and Largest Creditors

The debtors reported approximately $145 million in general unsecured debt and a total of 1,000 to 5,000 creditors. The five largest unsecured creditors are all institutional customers:

Other notable claims include Nexo Capital Inc. ($4.75 million promissory note) and the Chicago Blackhawks Hockey Team Inc. ($1.26 million disputed trade payable).

Secured debt. Celsius Network holds the only secured claim — approximately $4.8 million in promissory notes secured by substantially all debtor assets. The debtors assert the collateral value is approximately $30 million.

As of December 31, 2024, the debtors reported approximately $60 million in net operating losses and do not anticipate income tax liability for 2025.

Cash Collateral and Celsius Collateral Dispute

There is no standalone DIP financing. The debtors filed a cash collateral motion seeking authority to use existing cash and cryptocurrency — which constitutes Celsius's collateral — to fund operations during the case, proposing replacement liens and superpriority administrative expense claims as adequate protection. Celsius has not yet consented. An interim hearing was held March 17, 2026, with the final hearing scheduled for April 16, 2026.

Key professionals. McDermott Will & Emery LLP serves as lead bankruptcy counsel, with Katten Muchin Rosenman LLP as co-counsel. Berkeley Research Group (Mark Renzi) serves as financial advisor and chief transformation officer. Verita Global, LLC is the claims and noticing agent. Cleary Gottlieb Steen & Hamilton LLP represents the ad hoc group of BlockFills customers, and White & Case LLP with Klehr Harrison Harvey Branzburg LLP represents Celsius Network.

NewCo Transaction and Customer Recovery Structure

The debtors are pursuing a restructuring through a "NewCo" transaction negotiated with an ad hoc group of BlockFills customers represented by Cleary Gottlieb. Key terms from the non-binding term sheet:

NewCo formation and liquidating trust. A new entity will acquire BlockFills' operating cash, digital assets, technology platforms, brand assets, customer data, and transferable regulatory licenses — all free and clear of liens. Non-transferred assets and retained causes of action vest in a post-confirmation trust for the benefit of customers.

Customer treatment. A convenience class of 807 eligible customers with the lowest exposure would receive cash or digital asset payments up to a $1,000,000 aggregate cap. Participating customers with larger claims would receive pro rata trust interests and liquid assets, with options to convert into NewCo equity.

New capital and governance. Tier 1 investment of up to $15 million at a $15 million valuation; Tier 2 investment of up to $25 million at the lower of $30 million or market value. Equity ownership is capped at 500 accredited investors. A five-to-seven member board with a customer-represented majority would govern NewCo, with a 10–15% management incentive equity pool. NewCo must maintain segregated customer accounts, employ a qualified institutional custodian for digital assets, and conduct daily reconciliation of customer balances.

Key Timeline

Frequently Asked Questions

What happened to BlockFills?

BlockFills, operating under parent company Reliz Technology Group Holdings Inc., filed for chapter 11 bankruptcy on March 15, 2026 in Delaware. The filing followed counterparty losses totaling over $75 million, a customer fund misappropriation lawsuit, and the suspension of all customer deposits and withdrawals on February 11, 2026.

Can BlockFills customers get their money back?

Customer recovery depends on whether customer assets were properly segregated or commingled with corporate funds. The debtors are pursuing a "NewCo" restructuring that would create a liquidating trust for customer claims, with a convenience class for the 807 smallest account holders.

Who are the largest creditors in the BlockFills bankruptcy?

The five largest unsecured creditors are all institutional customers: 007 Capital LLC ($17.1 million), Richard E. Ward Revocable Trust ($9.4 million), Artha Investment Partners LLC ($6.9 million), SBI VC Trade Co Ltd ($6.3 million), and Dorado Family Holdings LP ($5.7 million). Celsius Network holds the only secured claim at approximately $4.8 million.

Did BlockFills misappropriate customer funds?

Dominion Capital LLC filed a lawsuit alleging that BlockFills misappropriated customer crypto assets, commingled client funds, and concealed losses. A federal judge issued a TRO freezing Bitcoin and requiring asset segregation. These allegations have not been adjudicated.

Who is the claims agent for BlockFills?

Verita Global, LLC (formerly Kurtzman Carson Consultants) serves as claims and noticing agent.

For more bankruptcy case coverage, visit the ElevenFlo bankruptcy blog.