BlockFills Faces Asset Freeze as Dominion Capital Alleges Misappropriation of $70M in Bitcoin

A U.S. Federal judge has issued a temporary restraining order (TRO) against crypto lender BlockFills, freezing approximately 70.6 Bitcoin (BTC), valued at roughly $71,251.86 as of March 5, 2026, following a lawsuit filed by Dominion Capital. The order, issued by Judge Mary Kay Vyskocil in the U.S. District Court for the Southern District of New York, prevents BlockFills from transferring or disposing of the assets or moving them outside the United States.

Dominion Capital’s Allegations

According to a complaint filed on February 27, Dominion Capital accuses BlockFills of misappropriating and unlawfully retaining millions of dollars worth of customer crypto assets. The lawsuit further alleges that BlockFills commingled client assets and concealed substantial losses. Dominion claims BlockFills refused to return the company’s assets after suspending withdrawals in February.

Court Orders and Background

In addition to the asset freeze, the court has ordered BlockFills to account for and segregate customer funds, including Dominion’s Bitcoin. The TRO was issued without prior notice to BlockFills, with the court citing a risk of “immediate and irreparable injury” due to the firm’s suspension of client withdrawals and concerns about potential insolvency. BlockFills is required to respond by March 17, after which the temporary order will expire unless extended by the court.

BlockFills’ Financial Difficulties

The legal action comes amid growing financial concerns surrounding BlockFills. Reports indicate the company incurred losses of approximately $75 million during the recent market downturn and was actively seeking a buyer or emergency funding CoinDesk. Nicholas Hammer, co-founder and CEO of BlockFills, has stepped down, with Joseph Perry now serving as interim CEO.

About the Companies

BlockFills, based in Chicago, provides liquidity, financing, and risk-management services to institutional clients in the cryptocurrency market. The firm facilitates crypto lending and borrowing, derivatives trading, and over-the-counter (OTC) execution for a range of clients, including hedge funds, asset managers, and mining companies. BlockFills processed over $60 billion in trading volume in 2025, a 28% increase from the previous year, serving approximately 2,000 institutional clients.

Dominion Capital is a New York-based private investment firm and family office that invests in private equity, structured finance, and digital assets, including Bitcoin mining companies like Bitfarms (BITF).

Industry Reaction and Potential Bankruptcy

Insolvency professional Thomas Braziel, founder of 117 Partners, suggests the situation is dire for BlockFills, stating, “The company is now hurtling towards bankruptcy.” Braziel believes that following these events, serious institutions will avoid the platform, making bankruptcy increasingly likely.

The case highlights the vulnerabilities within the crypto asset management sector and the urgent need for regulatory clarity and investor protection Legal News Feed.