Pushed over the edge by recent customer lawsuits and a “crypto winter” that saw Bitcoin valuation halved, Chicago-based trading firm BlockFills filed for Chapter 11 bankruptcy protection Sunday in a Delaware court.
BlockFills, which suspended customer withdrawals Feb. 6 amid liquidity issues, chose the path of voluntary reorganization after being unable to find a buyer or an investor to help recapitalize the cryptocurrency firm, which was more than $100 million in debt, according to the filing.
The Chicago Blackhawks are listed among the largest unsecured creditors.
“After extensive discussions with investors, clients, creditors, and other stakeholders, BlockFills has determined that a voluntary chapter 11 filing is the most responsible path forward in order to preserve the value of the business and maximize recoveries for stakeholders,” the company said in a statement Sunday.
Founded in 2017, BlockFills primarily served as a trading platform for “institutional, high net worth, and sophisticated traders,” according to the bankruptcy filing. It also diversified into cryptocurrency mining hardware investments and providing cryptocurrency loans.
Despite some missteps, including loan defaults and “significant losses” in the mining investments, the company had a “record year” for business in 2024, and looked to expand operations with perceived “favorable conditions for growth” under the incoming Trump administration, according to the filing.
The company reported $61 billion in trading volume last year – a 28% increase – but struggled to raise additional capital to support its growth plans. BlockFills shifted to a potential sale to a publicly traded cryptocurrency company, but the deal fell through in November.
BlockFills then began working with an existing investor on a plan to recapitalize the company, but that came crashing down in February as cryptocurrency valuation declines accelerated. The company then essentially froze customer transactions amid “mounting liquidity pressures and significant withdrawal requests,” according to the filing.
In recent weeks, BlockFills was hit with lawsuits by two unsecured creditors including Dominion Capital, which is owed more than $4.7 million, precipitating the bankruptcy filing. In its Feb. 27 lawsuit filed in New York federal court, Dominion Capital alleges BlockFills fraudulently concealed the misappropriation of customers’ cryptocurrency assets and used them to cover its loan defaults and mining equipment losses.
Other unsecured creditors include 007 Capital, which is owed $17.1 million, Artha Investment Partners at nearly $6.9 million and the Chicago Blackhawks, who are seeking nearly $1.3 million in a disputed claim, according to the bankruptcy filing.
The cryptocurrency industry has lost $2 trillion in valuation during the so-called crypto winter. Bitcoin, which peaked at $126,000 in October, fell to just $60,000 last month. It has since recovered to about $74,000.
BlockFills is the first major cryptocurrency bankruptcy amid the recent downturn.
In November 2022, crypto markets were roiled when Bahamas-based FTX, a startup that had rocketed into a $32 billion global cryptocurrency exchange, imploded in a massive bankruptcy.
The reverberations hit hard in Chicago, where FTX had recently opened its U.S. trading headquarters.
In the wake of the FTX bankruptcy, the price of Bitcoin, which reached nearly $69,000 in November 2021, fell by 78% to under $16,000 in what industry analysts then called a crypto winter.
While there are signs of a spring thaw — Bitcoin is up 23% from its February lows — winter is here again, circa 2026.