BlockFills, the Chicago-based crypto OTC trading platform backed by Susquehanna International Group, has officially filed for Chapter 11 bankruptcy protection. The institutional-grade platform, which processed over $60 billion in trading volume in 2025, spiraled from suspending withdrawals and losing its CEO to facing a creditor lawsuit and a court-ordered asset freeze, all within weeks.
$75 Million Hole Triggers the Crisis
On February 11, 2026, BlockFills cited “market and financial conditions” as reasons to halt client deposits and withdrawals, while also restricting trading. Roughly 2,000 institutional clients—including hedge funds, asset managers, market makers, and mining firms—were immediately trapped in a liquidity crunch. Reports indicate the platform had accumulated about $75 million in lending losses, mainly due to crypto collateral depreciating sharply during the market downturn. BlockFills actively searched for potential buyers or emergency financing but failed.
CEO Resigns, Creditor Alleges Misappropriation
On February 25, 2026, co-founder and CEO Nicholas Hammer stepped down, replaced by interim CEO Joseph Perry. The move was seen as a sign that internal turmoil had become unmanageable. Two days later, creditor Dominion Capital filed a lawsuit, accusing BlockFills of misappropriating client crypto assets, commingling client funds, and deliberately concealing massive losses—allegations far beyond simple financial mismanagement.
Federal Judge Issues Emergency Freeze Without Notice
On March 3, 2026, U.S. District Judge Mary Kay Vyskocil in New York issued a temporary restraining order (TRO) without notifying BlockFills in advance. The order froze 70.6 bitcoins held by Dominion Capital and prohibited BlockFills from transferring any assets overseas. Judge Vyskocil cited “imminent risk of bankruptcy” and the platform’s already halted withdrawals as justification for the ex parte emergency order, signaling that the court viewed the case as highly urgent. The court also ordered BlockFills to file a formal response by March 17.
Bankruptcy Advisor: The End Was Inevitable
Thomas Braziel, founder of restructuring advisory firm 117 Partners and a bankruptcy specialist, was blunt: “When BlockFills suspended withdrawals, the company was already accelerating toward bankruptcy.” After the allegations of client asset misappropriation emerged, “no serious institution would touch this platform,” making a bankruptcy filing the only viable path. BlockFills’ Chapter 11 petition means it seeks to restructure debts under court supervision rather than liquidate. But for the 2,000 trapped institutional clients, when—or if—they will recover their assets remains uncertain.