A U.S. federal judge has granted a temporary restraining order (TRO) against the cryptocurrency lender BlockFills, stemming from a lawsuit filed by Dominion Capital. This legal action comes amid serious allegations of asset misappropriation and mishandling by BlockFills, with the court ordering a freeze on assets involved in the dispute.
Dominion Capital’s complaint, lodged on February 27, accuses BlockFills of unlawfully retaining a significant amount of customer cryptocurrency assets and failing to return funds after halting withdrawals earlier this month. The firm claims that BlockFills not only misused customer funds but also commingled client assets while concealing substantial losses. In light of these concerns, Dominion sought a court order to ensure its assets trapped on BlockFills’ platform were protected, a request that has been granted.
On March 3, Judge Mary Kay Vyskocil of the U.S. District Court for the Southern District of New York issued the TRO, which prohibits BlockFills from transferring or disposing of approximately 70.6 bitcoin, valued at over $72,000, purportedly belonging to Dominion. The court further mandated that BlockFills account for and segregate customer funds pending a hearing regarding a possible preliminary injunction.
Reports in the media indicate that BlockFills has faced significant financial challenges, incurring losses around $75 million during recent market fluctuations. The firm has also been exploring options for a buyer or emergency financial support to stabilize its operations. A spokesperson for BlockFills stated that the firm does not comment on ongoing litigation as a matter of policy, while Dominion Capital has likewise chosen not to provide commentary.
The TRO was issued without prior notice to BlockFills, based on concerns of “immediate and irreparable injury” following the company’s suspension of client withdrawals, raising alarms about potential insolvency. BlockFills must respond to this order by March 17, with the current provisions set to expire unless extended.
BlockFills operates from Chicago and is known for providing liquidity, financing, and risk management services tailored to institutional clients within the cryptocurrency space, including hedge funds and asset managers. However, the company’s recent decision to pause customer withdrawals and deposits due to market distress has prompted scrutiny. The firm is in the process of navigating these turbulent conditions, having reported a trading volume exceeding $60 billion in 2025, a 28% increase from the previous year.
In the wake of these developments, Nicholas Hammer, co-founder and CEO of BlockFills, has resigned from his leadership role, with Joseph Perry stepping in as interim CEO. Industry professionals have expressed grave concerns about the company’s viability, with predictions of imminent bankruptcy. According to Thomas Braziel, an insolvency expert, the operational fallout from the situation may prevent any institutional players from engaging with BlockFills in the future.
The case has drawn significant attention and underscores the challenges facing cryptocurrency lending platforms amid market volatility and regulatory scrutiny. The legal proceedings initiated by Dominion Capital could set important precedents in the handling of digital asset disputes.
