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 as it seeks to restructure its finances while keeping its business running without disruption.

In an open letter to its community, Storj’s management and board described the move as an accelerated financial reorganization designed to deal with obligations that largely predate its current business strategy.

The company said it had already scaled back its operations with a leaner team and tighter cost controls while continuing to receive support from Inveniam, but acknowledged that its historical liabilities could not be addressed through business growth alone.

Financial Overhaul

The team said the Chapter 11 process provides a transparent framework to resolve those obligations and gives the company time to present a long-term business plan. Storj also sought to reassure users and token holders that its decentralized storage network remains fully operational and that the utility of the STORJ token within the network has not changed as a result of the bankruptcy filing.

Following the news, STORJ crashed by over 17% to $0.06. The team acknowledged that while trading has been “quiet and low” for a long time, it said that there will be “no comments” on the token’s price during the process.

Storj said that it wants the company to ultimately be owned by those who built and supported it, including management, its decentralized community, token holders, and other investors. As part of its planned restructuring, the company 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 will require court approval and must comply with legal priorities governing different stakeholder groups.

Industry’s Latest Casualties

The filing comes during a month that has seen multiple crypto companies seek bankruptcy protection. On July 22, Singapore-based Bitcoin mining firm Poolin and its US affiliates, Lonestar Dream Inc. and Lonestar Taproot LLC, also filed for Chapter 11 in New Jersey.

Meanwhile, Movement Labs sought bankruptcy protection in Delaware after months of financial troubles linked to its MOVE token launch.

Several other crypto companies have either shut down or begun winding down their operations. For instance, crypto derivatives exchange BitMEX announced it will permanently close on September 23 after more than 11 years in business. A few days later, BitMart also revealed plans to wind down its trading operations, while DEX aggregator Odos and exchange Dango announced they would discontinue their services.

Source: CryptoPotato