Key Insights: Storj Labs filed Chapter 11 after raising about $35M while keeping customer services running. It proposed shared ownership for management token holders and investors after restr
Storj Labs has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court, Northern District of West Virginia. It previously raised approximately $35 million through equity funding, grants, and a token sale.
The filing aims to address legacy debt while allowing the decentralized cloud storage company to continue operating during the court-supervised restructuring process. The company said customer services will remain uninterrupted throughout the proceedings.
It also outlined an uncommon restructuring proposal that could give management, token holders, investors, and the community ownership interests in the reorganized business.
Storj Labs files for bankruptcy after raising about $35M | Source: X The filing comes about nine months after Inveniam announced its acquisition of Storj. At that time, Inveniam said Storj would retain its leadership, existing services, community relationships, and the STORJ token as part of its decentralized infrastructure. Storj has not yet published a complete reorganization plan, creditor schedule, or final ownership structure.
Storj Labs said it will continue to operate in the ordinary course while the Chapter 11 process moves forward. The company added that it does not expect service interruptions for customers and will continue meeting its obligations, subject to bankruptcy court approval and applicable U.S. bankruptcy laws.
Kaloyan Raev, Storj’s Director of Software Engineering, said the restructuring is intended to resolve legacy obligations while preserving the company’s underlying business. He added that the proposal would allow management, the token community, and investors to participate in ownership of the reorganized company.
The company also said it has focused on its core business while disposing of previous acquisitions and non-essential operations. Inveniam stated that it supports the restructuring process and the company’s continued focus on its original decentralized cloud storage business.
One feature of the restructuring stands out from typical Chapter 11 cases. Storj said it plans to distribute ownership of the reorganized company among management, token holders, and investors.
Before filing for bankruptcy protection, Storj Labs raised approximately $35 million through several funding sources. The company completed a $30 million STORJ token sale in May 2017. The fundraising reached its target within seven days, although it had originally been scheduled to remain open until June 19.
Participants received STORJ tokens designed for use within the company’s storage network. Earlier in 2017, Storj also announced a $3 million seed funding round backed by investors associated with Qualcomm Ventures and Techstars.
CB Insights also revealed that Storj secured about $5 million in venture/equity funding across multiple rounds. Combined with the token sale, publicly reported fundraising reached roughly $35 million.
The bankruptcy filing coincided with a market reaction. The STORJ token fell 16% to around $0.06. Nearly $20 million worth of tokens changed hands against a market capitalization of about $27 million. The token has declined 79% over the past year and remains 98% below its March 2021 peak of $3.81.
The Storj Labs filing arrived during a week that also saw several cryptocurrency businesses announce major operational changes. BitMEX said it would close after 11 years following a strategic review. Its parent company stated that assets exceeded liabilities despite previous regulatory fines and an unsuccessful sale process.
BitMart also announced plans to wind down operations. The exchange stopped accepting new deposits and trading orders immediately. Trading will end on Aug. 26, while the platform is scheduled to close in January 2027.
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