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The Southern District Court of New York has frozen the assets of the cryptocurrency lender BlockFills, amounting to 70.6 bitcoins, amid a dispute with Dominion Capital.
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On February 27, the investment firm Dominion Capital filed a lawsuit, accusing the cryptocurrency lender BlockFills of misappropriating and unlawfully retaining client cryptocurrency valued at approximately $5 million. The plaintiff claims that the company concealed losses and refused to return assets following the suspension of withdrawals in February.
Federal Judge Mary Kay Vyskocil has prohibited BlockFills from transferring or selling the 70.6 BTC, allegedly belonging to Dominion, outside the United States while the case is under consideration.
The temporary court order was issued without prior notice to BlockFills. The judge highlighted the risk of “immediate and irreparable harm,” noting that the company had already suspended client withdrawals and might be on the verge of bankruptcy. BlockFills is required to respond to the lawsuit by March 17. The temporary injunction will expire unless the court decides to extend it by that date.
On February 11, BlockFills announced the suspension of client deposits and withdrawals, citing severe financial difficulties. The company stated that it was working towards a swift resolution and restoring platform liquidity. It was later revealed that the cryptocurrency lender incurred losses of $75 million amid the recent downturn in the crypto market and is seeking a buyer or attempting to secure emergency funding.
BlockFills is a Chicago-based firm offering cryptocurrency trading and lending services. The platform enables users to lend and borrow cryptocurrencies, trade derivatives, and conduct over-the-counter transactions for hedge funds, asset managers, and mining companies. Dominion Capital is an investment firm based in New York, functioning as a family office that invests in private equity and digital assets. The company notably supports mining firms, including Bitfarms (BITF).
Previously, a federal appeals court in the United States rejected an attempt by a Florida resident to reclaim bitcoins worth $354 million. The bitcoins, according to the plaintiff, were lost when authorities destroyed a hard drive seized during his arrest. This incident occurred in 2019, and the man was accused of document forgery.
