A U.S. federal judge has issued a temporary restraining order freezing assets belonging to crypto lending and trading firm BlockFills, following a lawsuit filed by investment company Dominion Capital. The order specifically prohibits BlockFills from transferring or disposing of approximately 70.6 Bitcoin (BTC), valued at over $6 million, while legal proceedings unfold.
The lawsuit, filed on February 27, 2026, accuses BlockFills of misappropriating customer funds, unlawfully retaining millions in client crypto assets, and commingling funds to cover operational losses. The conflict emerged after BlockFills suspended customer withdrawals on February 11, citing the need to protect clients and restore liquidity following a Bitcoin market correction that saw prices decline to around $60,000.
Judge Mary Kay Vyskocil of the Southern District of New York justified the urgent order by citing a risk of "immediate and irreparable harm," noting that BlockFills's potential insolvency threatened the recovery of collateral deposited by institutional investors. The firm, which serves about 2,000 institutional clients including asset managers and hedge funds, is reportedly facing losses of around $75 million from the recent market downturn.
BlockFills has until March 17, 2026 to formally respond to the court order before the temporary restraining order expires. The financial community is watching to see if the company can secure emergency funding or if the court will extend restrictions through a preliminary injunction.
This case represents another significant blow to confidence in institutional crypto lending services, highlighting critical concerns about asset segregation and risk management within the ecosystem.
