Federal Court Issues Freeze on 70.6 BTC Linked to BlockFills Amid Asset Misuse Allegations
Following allegations from Dominion Capital regarding the mishandling of client assets, a federal judge has issued an order freezing 70.6 Bitcoin associated with BlockFills and demanded the return of contested holdings.
A federal judge in the United States has imposed a temporary freeze on 70.6 Bitcoin associated with cryptocurrency trading and lending firm BlockFills, while also demanding a comprehensive segregated accounting of all customer funds. This action follows accusations from Dominion Capital that the firm misappropriated client assets and engaged in the commingling of funds, as detailed in court documents.
According to the complaint submitted on Feb. 27, BlockFills is accused of unlawfully withholding millions of dollars worth of cryptocurrency assets belonging to customers and utilizing commingled funds to offset financial losses. Judge Mary Kay Vyskocil granted a temporary restraining order (TRO) covering 70.6 Bitcoin (BTC), valued at approximately $5 million, which is currently in BlockFills' possession and which Dominion claims rightfully belongs to the investment firm, based on a court filing made public on Tuesday.
The court has set a deadline of March 17, 2026, for BlockFills to file its response to the order. This legal action arrives three weeks following BlockFills' decision to suspend withdrawals in February.
According to the filing, the TRO was granted against the defendant without prior notification due to Dominion Capital's successful demonstration of the "immediate and irreparable injury, loss, or damage" that the plaintiff would suffer if the defendant were permitted to respond in opposition before the order was issued.
BlockFills halts user withdrawals amid Bitcoin crash
On Feb. 11, BlockFills made the announcement that it would be halting both customer deposits and withdrawals during the wider cryptocurrency market correction.
According to the company's statement, the decision to suspend withdrawals was made with the intention of protecting clients and restoring platform liquidity after Bitcoin experienced a drop to $60,000.
Management has been working hand in hand with investors and clients to bring this issue to a swift resolution and to restore liquidity to the platform
The statement from BlockFills indicated this commitment, while also noting that clients retained the ability to open and close their existing positions in both spot and derivatives markets.
The suspension of services affected approximately 2,000 institutional clients, a group that includes hedge funds and asset managers who collectively contributed to the platform's $60 billion in trading volume during 2025, as reported in the company's annual disclosure.
Operating out of Chicago, BlockFills positions itself as an institutional-focused trading platform that caters to professional traders, asset managers and hedge funds, with certain services, including its Options Products, requiring a minimum threshold of $10 million.
Based in New York and established in 2011, Dominion Capital operates as an investment company with a primary focus on real estate investments, structured finance and private equity.