Bittrix is a scammer account to catch typo transfers. Just look at the account history.
I think your option 1 would be better and easier to implement, just remove @darthknight from the blacklist.
If you go with option 2, then transfer operations to @bittrix should be blocked. Blocking operations of bittrix, wouldn’t solve anything and continue resulting in loss of funds.
Of course the best move would be to remove all soft fork freezes.
Besides, if @darthknight would ever want to see his funds again it would require cooperation from @bittrix. And we all know scammers can quickly disappear never too be heard from again.
Option 2 is pointless, it's a sure way that the funds will never be in control again of the legitimate owner.