Key facts
- Decentralized cloud storage provider Storj Labs filed for Chapter 11 bankruptcy in West Virginia.
- The company intends to continue operations and customer services during the restructuring.
- Storj plans to propose a mechanism for STORJ tokenholders to participate in the reorganized company's equity.
- The company cited substantial legacy liabilities from an earlier period as the reason for filing.
- Storj is disposing of previous acquisitions and non-essential operations.
Decentralized cloud storage provider Storj Labs has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the Northern District of West Virginia, citing legacy obligations from an earlier period. The company stated that its underlying business is strong and right-sized, but these obligations necessitate the filing. Storj intends to continue operating its network and customer services without interruption and is disposing of previous acquisitions and non-essential operations.
As part of the restructuring plan, Storj aims to share ownership of the reorganized company among management, investors, and token holders, a provision rarely seen in Chapter 11 cases where tokenholders typically receive nothing. The company's STORJ token fell 16% to approximately 6 cents following the announcement, with nearly the entire supply changing hands in a day.
The filing extends a challenging week for the crypto industry, with Movement Labs also seeking Chapter 11 protection, and crypto exchanges BitMEX and BitMart announcing closures. Investor capital and attention have increasingly shifted towards artificial intelligence, impacting the ability of crypto businesses to raise funds or find exit opportunities.
Storj, which began in 2014, pays individuals and businesses to rent out unused disk space rather than operating its own data centers. It was acquired last year by Inveniam, which supports the current reorganization effort.