💥New Chapter 11 Bankruptcy Filing - Reliz LTD dba BlockFills💥
Another crypto bankruptcy. This time with a "customer-led" solution.
On March 15, 2025, Chicago-based Reliz Technology Group Holdings Inc., Reliz LTD dba BlockFills, and two affiliates (collectively, the “debtors”) filed “… customer-led …” chapter 11 cases in the District of Delaware (Judge Horan). Founded in ‘17 by Nicholas Hammer and Gordon Wallace, the debtors are a crypto lender and trading platform “… focused solely on institutional, high net worth, and sophisticated traders.” Here’s a live shot of Messrs. Hammer and Wallace whenever retail investors stopped by:
In retrospect, great marketing. When the ‘22 crypto winter hit and it caused, sooner or later, sh*tcos like Voyager Digital Ltd., Celsius Network LLC (“Celsius”), BlockFi Inc., FTX Trading Ltd., and Terraform Labs Pte. Ltd. to fall, investors were looking for “… a more professional platform to transact,” and BlockFills checked all the boxes.
In fairness, it kinda worked. In ‘25, BlockFills “… transacted $61.1B+ in volume [], up 28% from 2024 ,” including “… $17.9B+ across spot trading and $40.8B+ across derivatives[] trading.”
Then again, it kinda didn’t. Every other crypto biz was suffering, and the debtors are lenders. They had exposure and took Ls like these 👇:
📍In ‘22, BlockFills lent 123 BTC, 500 ETH, and 5k USDC to Babel Finance (“Babel”), representing ~$8.5mm in on-loaned assets, which evaporated into thin air after Babel filed a Singaporean bankruptcy in March ‘23.
📍In ‘22, BlockFills also loaned 50 BTC — at the time, worth ~$1mm — to Clark Sharp & Reynolds, which … um … also defaulted. Although BlockFills received a $1.75mm judgment, it ain’t been paid back a dime, and those fifty missing BTC? Now valued at ~$3.6mm.
📍In partnership with Nexo Capital Inc. (“Nexo”), “… a financing partner and equity shareholder …,” BlockFills entered into an “equipment loan for lease” with crypto mining co., RedBird Capital Partners-owned AEXA Digital Infrastructure (“AEXA”). But crypto mining took a hard downward turn during the ‘22 winter too, and AEXA started missing weekly payments to BlockFills. The two negotiated repayment terms, and AEXA agreed to pay ~$8mm by November ‘22 in full satisfaction of the loan, even though the balance was upwards of $14.75mm. Better than nothing, right? Worse, actually.
November ‘22 rolled around and AEXA reneged and offered $3mm. A ~63% deduct, to which BlockFills said “f*ck that,” so AEXA filed bankruptcy too. That sparked a fight between BlockFills and Nexo about the former’s repayment obligations to the latter. Fast forward two years, and BlockFills squashed the beef by paying $12mm to Nexo.
📍Finally, the one still rearing its ugly head. Back in ‘19, BlockFills and Celsius participated in a co-investment in the Grayscale Ethereum Trust, a passive, ETF-like vehicle. Long-story short, it was successful: a multimillion dollar profit was to be had. That is, until a dispute arose between the two that necessitated UK arbitration in January ‘23 … which found in favor of Celsius and further upheld on appeal.
BlockFills negotiated payment in two forms: a ~$3.6mm upfront in cash and a ~$12.7mm secured promissory note, which BlockFills stopped paying after August ‘25. As of the petition date, BlockFills still owes either ~$4.8mm on the note (using its own math) or ~$5.5mm (using Celsius’).
Compared to ‘25’s trade volume though, all these amounts are downright piddly. Nevertheless, another early ‘26 crypto winter put stress on the company’s balance sheet and liquidity profile.
Enough for customers to demand their assets starting in February ‘26.
To which, per CRO and first day declarant Mark Renzi of Berkeley Research Group LLC (“BRG”), the debtors had a response:
“… [O]n February 2, 2026, following a crypto market crash[] that created mounting liquidity pressures and significant withdrawal requests that, if honored, would have materially impaired BlockFills’ ability to continue operations, BlockFills temporarily suspended certain deposit and withdrawal activity. Initially, this measure was taken privately while BlockFills evaluated potential liquidity solutions. However, on February 6, 2026, BlockFills publicly announced a broader temporary suspension of deposits and withdrawals.”
See! It ain’t just the private credit bros who be like:
It took less than four weeks for customers, including seventh-largest depositor Dominion Capital (“DC”),* to see through the facade** and start suing. Here’s Mr. Renzi again:
“In the weeks immediately preceding the commencement of these Chapter 11 Cases, certain Debtor entities and current or former directors and officers of the Debtors were named in two lawsuits (the ‘Customer Actions’) asserting allegations including misappropriation of customer funds, conversion, breach of contract, and other fraud-based claims…
The plaintiffs in the Customer Actions also sought emergency injunctive relief, including temporary restraining orders (‘TRO’). The courts presiding over those matters granted TROs that significantly restricted the Debtors’ ability to conduct aspects of their business operations and exercise control over certain assets.”
Ergo, the bankruptcy.
The debtors have a plan though. In the lead-up to the filing, they negotiated with an ad hoc group of their largest customers (the “ad hoc group”) and executed a non-binding term sheet for a chapter 11 plan. It contemplates that:
📍Customers will receive a pro rata interest in a post-confirmation trust and a pro rata share in BlockFills’ liquid assets, to be paid out in cash or digital assets, with (i) BlockFills’ largest customers — all but the smallest “… [807] …” customers”*** — also receiving the option to convert a portion or all of their recoveries into the equity of a newco that intends to acquire the company’s operating business (the “newco”) and (ii) a convenience class for smaller customers to receive up to $1mm in cash or digital assets.
📍A capital raise of ~$40mm, under which those largest customers — coined “participating lenders” — can invest pro rata in the first $15mm in exchange for equity at the lower of (i) a $15mm valuation and (ii) the amount raised, and in the second $25mm at the lower of (i) a $30mm valuation and (ii) whatever value the market places on the biz.
📍Non-liquid, non-tangible assets will be dumped into the trust to be liquidated and distributed, and …
📍Well, that’s pretty much it, 😂.
We’ll admit it’s novel. “Workable” is another story.
Anyway, in bankruptcy, the debtors intend to operate on ~$30mm of cash and crypto collateral. As of filing, without Celsius’ consent. At the March 17, 2026 first day hearing, the debtors questioned its perfection status and, even if so, argued Celsius is “… heavily oversecured.” But it didn’t matter. Apparently post-filing, the debtors and Celsius had a pow-wow and agreed to cap spending during the first two weeks at $1mm absent the latter’s consent or a further court order.
However, do either of them actually own the “cash collateral”? Good question. It came up at the first-day hearing:
“The court: I do have one question that’s sort of a little unclear to me from the papers. The issue is this: it sounds to me like the pre-petition practice has been that customer funds and company funds are commingled. That’s been the practice, and under the term sheet, that practice would cease. So has there been any analysis done of to what extent funds might be customer funds as opposed to …?
Debtors’ Counsel, McDermott Will & Schulte LLP: Yes, there has been analysis, and effectively what we have determined is that customer funds, at least, you know, as we call them, funds that were deposited by customers, have always been commingled with company funds and other customer funds. The company’s position is that all of the funds in the estate currently subject potentially to liens that may exist, such as with Celsius potentially, all of the funds are property of the estate.”
The ad hoc group simply chose to reserve rights on the issue, but Mikhail Gurevich, a principal at DC, suggested there was a debtor-side f*ckup :
“So I just wanted to highlight for your information the fact that when we deposited our assets on the platform and signed the onboarding agreement as part of BlockFills’ document package, it specifically said that all customer deposits are going to be completely segregated from the general balance sheet of the company.”
Will it devolve?
For now, the debtors punted. The court will hold a second interim hearing on cash collateral on March 31, 2026 at 3pm ET.
The debtors are represented by McDermott Will & Schulte LLP (Darren Azman, Gregg Steinman, Joseph Evans, Ethan Dover, Andrew Mark, Carole Wurzelbacher, Catherine Bloomberg) and Katten Muchin Rosenman LLP (Peter Siddiqui) as legal counsel and BRG (Mark Renzi) as financial advisor and CRO. The ad hoc group is represented by Cleary Gottlieb Steen & Hamilton LLP (Sean O’Neal, Jane VanLare, Theodore Leonhardt, Aracely Valencia, Brendan Gerdts) and Young Conaway Stargatt & Taylor, LLP (Sean Greecher). Celsius Network Limited, acting by and through the Blockchain Recovery Investment Consortium, LLC, is represented by White & Case LLP (Keith Wofford, Greg Pesce, Stephen Moeller-Sally) and Klehr Harrison Harvey Branzburg LLP (Domenic Pacitti, Sally Veghte). DC sent Mr. Gurevich, a non-lawyer.
*The docket for DC’s suit is here.
**In the interim and with the debtors’ facing $75mm in losses, Mr. Hammer peaced out as CEO.
***Even if bracketed, “807” is oddly specific. We’re curious who the 808th largest customer is.
Company Professionals:
Legal: McDermott Will & Schulte LLP (Darren Azman, Gregg Steinman, Joseph Evans, Ethan Dover, Andrew Mark, Carole Wurzelbacher, Catherine Bloomberg) and Katten Muchin Rosenman LLP (Peter Siddiqui)
Financial Advisor and CRO: Berkley Research Group, LLC (Mark Renzi)
Special Committee Member/Independent Director: Matthew Kahn
Legal: Cole Schotz P.C. (Justin Alberto, Seth Van Aalten)
Claims Agent: Verita (Click here for free docket access)
Other Parties in Interest:
Ad Hoc Group of BlockFills Largest Customers
Legal: Cleary Gottlieb Steen & Hamilton LLP (Sean O’Neal, Jane VanLare, Theodore Leonhardt, Aracely Valencia, Brendan Gerdts) and Young Conaway Stargatt & Taylor, LLP (Sean Greecher)
Celsius Network Limited, acting by and through the Blockchain Recovery Investment Consortium, LLC
Legal: White & Case LLP (Keith Wofford, Greg Pesce, Stephen Moeller-Sally) and Klehr Harrison Harvey Branzburg LLP (Domenic Pacitti, Sally Veghte)