BlockFills - Chapter 11 Case Summary

Business Description

Reliz Technology Group Holdings, Inc. ("Reliz"), the group holding company and parent entity of Reliz Ltd., Reliz Technologies LLC, and Reliz CI Ltd. (collectively, the "Debtors" or "BlockFills"), is a digital asset brokerage services company that operates proprietary trading technology enabling professional and institutional customers to buy and sell cryptocurrency and cryptocurrency derivatives.

• BlockFills focused exclusively on institutional, high-net-worth, and sophisticated traders and did not offer its services to retail customers.
• The Company provided 24/7 market access to a diverse client base that included cryptocurrency-native companies, high-net-worth professional traders, hedge funds, brokers and broker-dealers, exchanges, crypto mining companies, and investment managers.

Prior to the Petition Date, BlockFills' suite of offerings included access to a trading platform for fiat on and off ramp settlement, cryptocurrency liquidity and trading services (including over-the-counter, or "OTC"), cryptocurrency options trading, collateralized lending and credit, and mining services.

• Customers could execute transactions through BlockFills' front-end trading platform (Vision Trader), application programming interface ("API") connections, or through OTC trades linked with cryptocurrency liquidity providers.
• BlockFills utilized Fireblocks custody technology almost exclusively for cryptocurrency deposits, leveraging Fireblocks' direct counterparty connectivity, whitelisting, and enhanced security mechanisms—including no single point of failure—to meet its security and operational needs.

Since 2018, BlockFills had been regarded as a reputable venue for institutional digital asset trading. Following the significant industry turmoil of 2022—which saw the collapse of several major cryptocurrency businesses including Voyager, Celsius, BlockFi, FTX, and Terraform Labs—sophisticated investors increasingly sought more professional platforms to transact, and by late 2023, BlockFills' reputation positioned it to capture significant new customer growth and business volumes.

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Corporate History

BlockFills was founded in 2017 by Nicholas Hammer and Gordon Wallace as a digital asset brokerage services company.

• The primary entity in the corporate structure was Reliz Ltd., a Cayman Islands entity, which raised $250,000 in equity capital and secured a $750,000 line of credit to fund initial cryptocurrency trading operations and settlements.
• As the cryptocurrency industry grew rapidly, BlockFills expanded its service offerings to accommodate additional digital assets of increasing market capitalization and introduced derivatives trading and collateralized lending of fiat currency and stablecoins, with other digital assets pledged as collateral.

Capital Raises

• In May 2021, BlockFills launched a Pre-Series A equity capital raise of approximately $7 million, provided by seven capital contributors.
• In October 2021, BlockFills initiated a Series A capital raise with an objective to secure up to $50 million to accelerate growth—at a time when peer cryptocurrency companies were raising hundreds of millions of dollars at an industry-leading pace.
  • BlockFills closed the Series A round in January 2022, securing approximately $36 million in total proceeds across two closings in December 2021 and January 2022.
  • Series A proceeds were expected to be invested largely in Bitcoin mining machines, which were intended to generate new bitcoin that could be held or converted to U.S. dollars for daily transactional business while also providing a return on invested capital.

Industry Turmoil and Repositioning

• In 2022, shortly after the Series A closing, the cryptocurrency industry experienced significant turmoil when Terraform Labs' algorithmic stablecoin UST de-pegged and lost essentially all of its value, causing widespread losses among individual investors and industry firms alike.
• The fallout produced cascading downstream impacts from 2022 through 2023, including bankruptcies and significant counterparty risk management issues. Several well-known cryptocurrency businesses—including Voyager, Celsius, BlockFi, FTX, and Terraform Labs—ceased to exist in the aftermath.
  • As the pool of available platforms contracted and industry-wide concerns persisted, sophisticated investors sought more professional trading venues. BlockFills' established reputation positioned it uniquely, and by late 2023, new customer acquisition and business volumes began to increase significantly.

Banking Disruptions

• From 2018 through 2023, BlockFills utilized Silvergate Bank and Signature Bank for fiat currency banking. Following both institutions' failures in March 2023, the Company pursued numerous alternative banking solutions domestically and abroad to ensure redundant capabilities against further disruptions.

Management History

• Co-founder Nicholas Hammer served as Chief Executive Officer from BlockFills' inception in 2017 until July 2025. Co-founder Gordon Wallace has served as President and Head of Global Trading Operations since 2017.
• In July 2021, the Company hired Brian King as Chief Compliance Officer, and in October 2023, Ross Kleiman joined as General Counsel.
• BlockFills did not have additional senior executive management until late 2024, when several individuals were hired or repositioned:
  • Gabriella Kusz became Head of Strategy in August 2024 and was subsequently repositioned as Chief Operating Officer in December 2024.
  • Neil Van Huis, one of the earliest investors and a director since 2018, was repositioned from a business development role to Chief Strategy Officer.
  • Amy Shelly was appointed Chief Financial Officer in October 2024 but resigned in January 2026.
• On July 23, 2025, BlockFills hired Joseph Perry as Interim Chief Executive Officer. In August 2025, the Company retained BRG to assist with restructuring and financial reporting, and Mark Renzi, a Managing Director at BRG, was appointed Chief Restructuring Officer.

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Operations Overview

BlockFills operated a proprietary trading technology platform that enabled professional and institutional customers to execute cryptocurrency and cryptocurrency derivative transactions through multiple channels: the Company's front-end trading platform (Vision Trader), API connections, or OTC trades linked with cryptocurrency liquidity providers.

Cryptocurrency Liquidity and Trading Services

• BlockFills' proprietary aggregation technology consolidated order books from multiple exchanges and market makers into a unified, deep liquidity pool. Its smart order routing technology—built on principles from traditional financial markets—sought the best available prices across venues, frequently offering customers better pricing and deeper liquidity than alternatives in the market.
• Customers could customize their liquidity providers based on individual trading strategies and execute trades through Vision Trader's user interface—which displayed positions, credit utilization, available balances, and order controls—or via API connections that integrated directly into BlockFills' liquidity and trading capabilities.
• BlockFills maintained credit relationships with its liquidity providers to facilitate instantaneous transaction execution. All daily trading activities were typically settled by 4:00 p.m. Central Time, unless involving derivatives or lending transactions with future maturities.

Derivatives Trading

• BlockFills operated an OTC derivatives desk for qualified individuals and business entity customers in the United States, each of whom was required to qualify as an "Eligible Contract Participant" (or "ECP") under Section 1a(18) of the Commodity Exchange Act and related guidance.
• The Company also offered options products to certain non-U.S. professional customers.

Collateralized Lending and Credit Services

• BlockFills has offered borrowing and lending of cryptocurrency since 2019. Loans were typically governed by lending agreements that permitted BlockFills to liquidate pledged collateral in the event of borrower default.

Crypto Mining Services

• BlockFills offered services geared toward large-scale cryptocurrency miners, including mining pool access, trading and OTC support, and treasury services.

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Prepetition Obligations

As of the Petition Date, the Debtors report approximately $4.8 million in settlement-related note obligations and approximately $145 million in general unsecured debt. The Company's prepetition capital structure is summarized below:

Celsius Promissory Notes

• Approximately $4.8 million in principal and accrued interest remains outstanding under two promissory notes (the "Celsius Notes") issued to Celsius Network Ltd. in connection with a negotiated settlement of an arbitration dispute.
  • The dispute originated from a joint investment arrangement between BlockFills and Celsius involving a Digital Asset Lending Agreement executed in December 2019, under which BlockFills borrowed Ethereum collateralized by U.S. Dollars and co-invested the ETH into the Grayscale Ethereum Trust.
  • Following a disagreement over the distribution of proceeds upon the unwinding of the investment, the parties commenced arbitration in the United Kingdom in May 2021. At the conclusion of a four-day hearing in January 2023, the arbitrator ruled in Celsius's favor, awarding it the full amount of the initial ETH plus the transaction proceeds. The award was subsequently upheld on appeal in 2024.
  • BlockFills negotiated a structured payment schedule under the Celsius Notes, making an upfront payment of approximately $3.6 million with the remaining $12.7 million to be paid over time. BlockFills has not made a payment on the Celsius Notes since its monthly installment due in August 2025.

General Unsecured Debt

• The Debtors carry approximately $145 million in general unsecured debt obligations.

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Events Leading to Bankruptcy

Exposure to Loan Counterparties

• From 2022 through 2025, BlockFills sustained significant losses stemming from several counterparty defaults and bankruptcies across its lending portfolio. While the majority of BlockFills' lending activities matured successfully, three loans proved particularly damaging:
  • Babel Finance: BlockFills extended net loans of 123 BTC, 500 ETH, and 5,000 USDC to Babel Finance in 2022. Babel Finance filed for bankruptcy in Singapore on March 6, 2023, due to its own exposure to bankrupt counterparties, trapping approximately $8.5 million of BlockFills' assets in the proceedings with no prospect of repayment.
  • Coinsource (Clark Sharp & Reynolds): In 2022, BlockFills provided a 50 BTC loan—valued at approximately $1 million at the time—to Coinsource, a bitcoin ATM operator. Coinsource defaulted on the loan. Although BlockFills obtained a judgment for $1.75 million, the judgment remains unsatisfied; the 50 BTC was valued at approximately $3.6 million as of the Petition Date.
  • AEXA Digital Infrastructure: BlockFills, in partnership with financing partner and equity shareholder Nexo Capital Inc., provided an Equipment Loan for Lease to AEXA, a cryptocurrency mining company backed by multi-billion-dollar private equity investor RedBird Capital Partners. The opportunity was initially attractive given its 50% loan-to-value ratio, AEXA's upfront capital commitment, and access to up to $100 million in capital from RedBird. However, AEXA began experiencing financial hardship in 2022 as cryptocurrency mining profitability declined, and it started missing required weekly payments.
    • After extended negotiations, AEXA and RedBird directors agreed to repay the remaining principal without penalty, with a deadline of November 8, 2022. BlockFills expected to recoup approximately $8 million of the $14.75 million owed. On the deadline date, AEXA offered only $3 million and sought to terminate the agreement. BlockFills rejected the proposal, and AEXA subsequently filed for bankruptcy—having directed $3 million in payments to vendors and director compensation prior to filing. A trustee is investigating the misappropriation of those payments.
    • The AEXA default triggered a dispute between Nexo and BlockFills regarding BlockFills' repayment obligations to Nexo. In late 2024, BlockFills settled with Nexo for approximately $12 million, severely weakening its balance sheet and liquidity.

Celsius Transaction and Arbitration

• In late 2019, Celsius—a now-bankrupt cryptocurrency company with which BlockFills had an existing borrowing and lending relationship—approached BlockFills to participate in a co-investment transaction. Under the arrangement, BlockFills borrowed Ethereum collateralized by U.S. dollars for the purpose of co-investing in the Grayscale Ethereum Trust, which offered potential arbitrage opportunities if market conditions remained favorable through the product's lock-up period.
  • The parties executed a term sheet and a Digital Asset Lending Agreement on December 3, 2019. BlockFills created a brokerage account, borrowed ETH, posted U.S. dollar collateral with Celsius, and invested the ETH into the Grayscale Ethereum Trust.
  • Upon expiration of the lock-up period, BlockFills and Celsius agreed to sell the Trust shares for a significant multi-million-dollar profit and settle the transaction. BlockFills followed the mutual instructions and contacted Celsius to determine its preferred form of compensation. Celsius did not respond for multiple weeks, and when a staff member eventually replied, Celsius demanded the return of the initial ETH in addition to its share of the profits—terms inconsistent with the mutually executed term sheet.
  • A dispute ensued, and in May 2021, the parties commenced arbitration in the United Kingdom. On July 13, 2022, Celsius filed for Chapter 11 protection in the Southern District of New York. The four-day arbitration proceeded in January 2023, and the arbitrator awarded Celsius the entire initial ETH plus transaction proceeds—a ruling upheld on appeal in 2024.
  • Following the unfavorable outcome, BlockFills negotiated a payment schedule under two promissory notes, paying $3,602,140.82 upfront with the remaining $12,651,011.70 to be paid over time. The current principal outstanding on the Celsius Notes is approximately $4.8 million, with BlockFills having ceased payments since August 2025.

Mining Hardware Investment

• In late 2021 and early 2022, following completion of its Series A Round, BlockFills deployed proceeds toward the acquisition of cryptocurrency mining hardware to be placed at data sites, as planned and approved by the Board.
  • Throughout 2022, the cryptocurrency mining industry experienced severe disruption driven by a rapid decline in profitability. Unhedged exposure to rising energy costs—a primary driver of mining economics—led to significant financial impairment and multiple bankruptcy filings across the sector, forcing many mining companies to liquidate bitcoin holdings to cover operating losses.
  • Although BlockFills secured a data site partnership, the facility was not ready to operate when BlockFills attempted to deploy its hardware. As a result, BlockFills was unable to activate its full mining capabilities as originally anticipated, reducing expected revenue and extending the timeline for returns on its capital investment. BlockFills ultimately did not recoup its investment in the mining business line and suffered significant losses.

Professional Services and One-Time Costs

• From 2022 through 2026, BlockFills incurred significant professional service expenses in connection with the numerous disputes, proceedings, arbitrations, litigation, accounting advisory work, audit preparation, and related matters. These costs were necessary to assess, analyze, and validate BlockFills' financial condition and operational capabilities as circumstances evolved.

Operational Expansion and Record Performance

• Despite the headwinds, BlockFills was a significant recipient of new business opportunities arising from the industry-wide downturn in the digital asset sector during 2022 and 2023, propelling 2024 to a record year for business performance.
  • With a new presidential administration entering office and increased clarity regarding future regulatory frameworks applicable to the cryptocurrency industry, BlockFills faced favorable conditions for growth. In response, the Company undertook initiatives to expand operations, including hiring key personnel, pursuing additional jurisdictional capabilities through new licensing applications, and increasing investment in marketing efforts.

Recent Lawsuits and Temporary Restraining Orders

• In the weeks immediately preceding the Chapter 11 filing, certain Debtor entities and current or former directors and officers were named in two lawsuits (the "Customer Actions") asserting allegations including misappropriation of customer funds, conversion, breach of contract, and other fraud-based claims:
  • Dominion Capital LLC v. Reliz Ltd., Case No. 1:26-cv-01672 (S.D.N.Y. Feb. 27, 2026)
  • 1548199 Alberta Ltd. and Robert J. Bertram v. Reliz Technology Group Holdings Inc., et al., Case No. 26-cv-02451 (N.D. Ill. March 5, 2026)
• The plaintiffs sought emergency injunctive relief, and the courts granted temporary restraining orders that significantly restricted the Debtors' ability to conduct business operations and exercise control over certain assets. These restrictions created substantial operational and liquidity challenges, making it increasingly difficult to maintain ordinary-course operations while simultaneously responding to expedited litigation demands.
  • Without the protections of Chapter 11, the Debtors' liquidity position and operational stability would likely have continued to deteriorate as resources were diverted to defend the Customer Actions and address the effects of the TROs.

Organizational Reset and Corrective Measures

• In late summer 2025, BlockFills undertook a comprehensive leadership and governance reset aimed at restoring operational stability through risk management enhancements, a strategic refocus on the core business, and the implementation of financial controls and disciplines. Key measures included:
  • Implementation of daily reporting of BlockFills' assets and tighter exposure oversight across lending and trading activities;
  • Initiation of the wind-down of certain businesses and entities, including the discontinuation of cryptocurrency mining activities;
  • Refocusing on principal trading and the borrowing and lending business lines;
  • Introduction of formal administrative processes, cash conservation measures, liquidity forecasting, and enhanced reporting controls; and
  • Reduction of operating expenses across the organization.

Prepetition Restructuring Efforts

• In 2025, BlockFills retained investment banking advisors and began preparations for a potential Series B equity financing. However, delays in completing the 2024 financial audit materially impeded the Company's ability to access the capital markets.
  • In August 2025, BlockFills pivoted to explore alternative strategic transactions, including a sale of the company or a broader capital restructuring, retaining BRG and Katten Muchin Rosenman LLP to assist with those efforts.
• In September 2025, BlockFills entered discussions with a publicly traded cryptocurrency industry participant (the "Acquisition Counterparty") regarding a potential acquisition. Over approximately two months, the parties engaged in substantial due diligence, in-person meetings, preparation of go-forward business plans, and numerous rounds of negotiations. In mid-November 2025, however, the Acquisition Counterparty's board of directors declined to proceed for reasons outside BlockFills' control.
• BlockFills immediately pivoted to pursue alternative options, engaging in November 2025 with an existing investor (the "Potential Investor") interested in a recapitalization combining new equity and debt financing. By early January 2026, significant progress had been made on the equity component, but feedback from potential debt providers indicated that raising the debt portion would be exceedingly difficult.

Crypto Market Crash and Suspension of Withdrawals

• On February 2, 2026, a significant cryptocurrency market crash—with BTC dropping below $80,000 for the first time since April 2025—created mounting liquidity pressures and triggered significant withdrawal requests that, if honored, would have materially impaired BlockFills' ability to continue operations.
  • BlockFills temporarily suspended certain deposit and withdrawal activity, initially on a private basis while evaluating liquidity solutions. On February 6, 2026, BlockFills publicly announced a broader suspension and communicated with customers through written updates and video conferences regarding ongoing efforts to address liquidity constraints.
  • The suspension materially altered the dynamics of ongoing discussions with the Potential Investor, and the recapitalization transaction was unable to be completed.
• From the period preceding the suspension through the Petition Date, BlockFills, together with its shareholders, advisors, and potential investors and acquirers, continued to evaluate and pursue alternatives to stabilize the business outside of Chapter 11. Despite these efforts, the Company was unable to secure sufficient liquidity or consummate a transaction addressing its near-term obligations and long-term capital structure.

Governance Initiatives

• On March 12, 2026, BlockFills formed a Special Committee comprised of disinterested director Matthew Kahn. The Special Committee is vested with the authority to manage potential conflict matters, including investigating, releasing, or settling certain potential claims or causes of action of BlockFills.

Path Forward: Term Sheet and Proposed Restructuring

• BlockFills has negotiated a Term Sheet with an Ad Hoc Group comprised of its largest customers, laying the framework for a Chapter 11 plan centered around a customer-led acquisition of the BlockFills business:
  • BlockFills will reorganize into a newly formed entity ("NewCo"), which will acquire certain assets—including liquid assets, tangible assets, the technology platform, intellectual property, customer accounts, brand assets, and regulatory licenses—free and clear of all liens, claims, and encumbrances.
  • Any assets not transferred to NewCo will vest in a post-confirmation liquidating trust (the "Trust") overseen by an advisory of customers selected by the Ad Hoc Group.
  • Participating Customers with Allowed Claims will receive a pro rata share of Trust interests and a pro rata share of BlockFills' liquid assets, with the option to receive distributions as (i) cash/digital assets, (ii) full conversion into NewCo equity, or (iii) a combination of the two.
  • A Convenience Class of approximately 807 customers with the lowest individual exposure amounts will receive payments in cash or digital assets up to an aggregate of $1,000,000, easing the administrative burden on the estates.
  • Trade claims are bifurcated into two categories: "Ongoing Trade Claims"—those held by vendors and suppliers deemed essential to NewCo's continued operations who have agreed to provide goods or services on substantially the same or more favorable terms—and "OldCo Trade Claims," which are all remaining trade claims. OldCo Trade Claims will receive interests in a post-confirmation trust.
• NewCo's governance and operational framework includes several key provisions:
  • Participating Customers may invest additional capital on a pro rata basis in exchange for NewCo equity, at a valuation of the lower of $15 million and the amount raised, until NewCo has raised $15 million in capital.
  • NewCo equity shall be held by no more than 500 entities, all of whom must be accredited investors.
  • An initial Board of five to seven members, with a majority comprised of Participating Customer representatives and at least one independent Financial Expert Director, will oversee operations.
  • NewCo will maintain segregated customer accounts with a U.S.-regulated bank and a qualified institutional custodian, with daily reconciliation of customer balances—ensuring customer funds cannot be borrowed, pledged, or hypothecated without prior express written consent.
  • A management incentive pool of 10% to 15% of NewCo equity, subject to customary vesting, will be established to attract and retain key talent.