Storj Labs filed for Chapter 11 bankruptcy protection in the US on Wednesday, sending its STORJ token down 17%. The company said its decentralized storage network remains fully operational and the token's utility is unchanged. The filing is part of a financial reorganization aimed at addressing historical liabilities that predate its current business strategy.
Why Storj filed now
Storj has been scaling back operations for a while — a leaner team, tighter cost controls. The Chapter 11 filing lets it restructure debts and contracts while keeping the business running. The company said the move targets liabilities that built up before it pivoted to its current decentralized storage model. It's not a fire sale; it's a reset.
What happens to STORJ token
Storj says the token's utility on the network hasn't changed. Users can still earn and spend STORJ for storage services. The bigger question is what happens to token holders in the restructuring. Storj intends to propose a mechanism for them to participate in the equity of the restructured business — but that needs court approval. No details yet on how that would work or what it would be worth.
A wave of crypto closures
Storj isn't alone. This month, Bitcoin mining firm Poolin and its affiliates filed for Chapter 11 in New Jersey. Movement Labs sought bankruptcy protection in Delaware after financial troubles tied to its MOVE token launch. Crypto derivatives exchange BitMEX announced it will permanently close on September 23 after more than 11 years. BitMart is winding down trading operations. Odos and Dango also said they're shutting down services. The industry is still shedding weak players.
Storj's reorganization plan will go before a bankruptcy judge. The key date for token holders is the court hearing on the equity participation proposal — no date set yet. Until then, the network runs, the token trades, and the company tries to dig out from under its old debts.
