Nikolas Sargeant
Crypto lending platform BlockFills has filed for Chapter 11 bankruptcy in a Delaware court, weeks after suspending customer deposits and withdrawals amid deteriorating market conditions. The filing was made on Sunday by Reliz LTD, BlockFills' operating company, alongside three related entities, with the firm seeking to restructure rather than liquidate.
In the filing, BlockFills disclosed estimated assets of between $50 million and $100 million against liabilities of between $100 million and $500 million. The company said the restructuring process would preserve business value and maximize recoveries for stakeholders, following extensive consultations with investors, clients, and creditors.
The collapse follows a sharp Bitcoin price decline that saw the asset fall from over $97,000 to under $64,000 between mid-January and early February, itself a continuation of a broader slide from an October peak above $126,000. BlockFills cited the market downturn as a key reason for suspending customer access to funds in February while it attempted to restore platform liquidity.
The situation escalated earlier this month when a US court temporarily froze 70.6 Bitcoin tied to BlockFills following a lawsuit from client Dominion Capital, which accused the firm of misappropriating customer assets and commingling funds. Dominion alleged that BlockFills executives had acknowledged a balance sheet shortfall on multiple occasions. The Financial Times had reported on March 6 that the company was already exploring restructuring options with legal and financial advisors.
The bankruptcy draws inevitable comparisons to the wave of crypto lender collapses in 2022, when the Terra ecosystem implosion triggered the downfall of Celsius, Voyager Digital, BlockFi, and Genesis.
