Storj Files for Chapter 11 Bankruptcy as STORJ Token Plunges 17%

Decentralized cloud storage company Storj Labs has voluntarily filed for Chapter 11 bankruptcy protection in the US Bankruptcy Court for the Northern District of West Virginia. The move is intended to restructure finances while keeping the business running without disruption. In an open letter, management described it as an accelerated financial reorganization to address obligations that largely predate its current business strategy.

The company said it had already scaled back operations with a leaner team and tighter cost controls, while continuing to receive support from Inveniam. However, it acknowledged that historical liabilities could not be resolved through business growth alone. The Chapter 11 process provides a transparent framework to deal with those obligations and gives Storj time to present a long-term business plan.

Storj reassured users and token holders that its decentralized storage network remains fully operational, and the utility of the STORJ token within the network is unchanged. Following the news, STORJ crashed over 17% to $0.06. The team noted that trading has been “quiet and low” for a long time and said there would be “no comments” on the token’s price during the process.

As part of the planned restructuring, Storj intends to propose a mechanism that would allow token holders to participate in the equity of the restructured business. The eligibility requirements, structure, and terms have yet to be developed and will be disclosed through the formal court process. Any such plan requires court approval and must comply with legal priorities governing different stakeholder groups.

The filing comes during a month that has seen multiple crypto companies seek bankruptcy protection. On July 22, Bitcoin mining firm Poolin and its affiliates filed for Chapter 11 in New Jersey. Movement Labs also sought bankruptcy protection in Delaware after financial troubles tied to its MOVE token launch. Other crypto firms, including BitMEX, BitMart, Odos, and Dango, have announced shutdowns or wind-downs.

Source: https://cryptopotato.com/storj-files-for-chapter-11-bankruptcy-as-storj-token-plunges-17/