A US federal judge has issued a temporary restraining order (TRO) against crypto lender BlockFills in a lawsuit filed by Dominion Capital, temporarily freezing assets linked to the dispute, according to a filing seen by CoinDesk.
In a complaint dated February 27, Dominion alleged that BlockFills misappropriated and unlawfully retained millions of dollars in clients’ crypto assets, commingled client assets and concealed large losses.
Dominion claimed BlockFills hid misappropriation of customer funds and refused to return the company’s assets after suspending payouts in February. As part of the complaint, the investment firm sought an asset freeze to protect its crypto held on Blockfills’ platform, which was granted by the court.
In an order filed March 3 in the U.S. District Court for the Southern District of New York, federal judge Mary Kay Vyskocil barred the firm from transferring or disposing of 70.6 bitcoin allegedly belonging to Dominion, or moving assets outside the United States while the case continues.
The court also ordered Blockfills, which is backed by trading giant Susquehanna, to account for and segregate customer funds, including Dominion’s bitcoin, pending a hearing on a possible preliminary injunction.
CoinDesk reported last month that the crypto lender had incurred losses of around $75 million during the recent market downturn and was looking for a buyer or emergency funding
BlockFills is a Chicago-based crypto trading and lending firm that provides liquidity, funding and risk management services to institutional clients. Its platform facilitates crypto lending and borrowing, derivatives trading and over-the-counter (OTC) execution for hedge funds, asset managers, market makers and mining companies.
A Blockfills spokesman said as a matter of policy, the company does not comment on pending litigation. Dominion Capital declined to comment.
A temporary restraining order in the United States is an emergency court order that temporarily stops someone from taking a specific action until the court can hold a full hearing. It is commonly used in legal disputes involving money, assets or financial activity to prevent immediate harm.
The TRO was issued without notice to BlockFills, with the court citing a risk of “immediate and irreparable harm,” noting that the firm had suspended client withdrawals and that insolvency could be imminent.
BlockFills must respond by March 17, when the temporary injunction is set to expire unless extended by the court.
Dominion Capital is a New York-based private investment firm and family office that invests across private equity, structured finance and digital assets, including backing bitcoin mining companies such as Bitfarms (BITF).
Hard times
Blockfills said it stopped customer withdrawals and deposits on February 11 due to recent market and financial conditions.
The firm said at the time that it was working with investors and customers to reach a quick resolution and restore liquidity to the platform. CoinDesk subsequently learned that the crypto lender had incurred losses of around $75 million in the recent market downturn and was seeking a buyer or emergency financing.
CoinDesk also reported that Nicholas Hammer, co-founder and CEO of Blockfills, has stepped down from his leadership role. The company’s website now lists Joseph Perry as the interim CEO.
Blockfills said it processed over $60 billion in trade volume by 2025, up 28% from the previous year, and is among the more active institutional crypto lending and borrowing desks. It serves around 2,000 institutional clients, including hedge funds, asset managers and mining companies.
“The company is now headed for bankruptcy,” according to insolvency professional Thomas Braziel, founder of 117 Partners.
“After something like that, no serious institution touches the platform,” Braziel said. “They’re going to have to file for bankruptcy.”
The New York Law Journal first reported news of the Dominion complaint on Monday.
Read more: Blockfill’s co-founder and CEO Nicholas Hammer has stepped down
