Storj price plummets 15% after bankruptcy filing by Storj Labs

Storj Labs, the company behind the decentralised cloud storage network Storj, is filing for bankruptcy protection through a Chapter 11 process. The aim is to restructure existing debts while the network continues to operate normally. The STORJ token reacted immediately with a price drop of nearly 15%, falling to $0.06317.

Chapter 11 to address legacy debts

A Chapter 11 process in the United States allows a company to reorganise its debts without having to shut down immediately. Storj Labs is deliberately choosing this route to resolve financial problems without jeopardising the operation of the decentralised storage network. The company explicitly states that its services will remain fully operational during this process.

Storj Labs raised approximately $35 million in recent years. A large portion of that, around $30 million, came from the token sale of 2017. The so-called legacy debts from that period now form the core of the financial problems the company is facing.

STORJ price stands 99% below all-time high

The price drop of nearly 15% puts further pressure on the STORJ token. At the time of writing, the coin is trading at around $63, representing a loss of $0.01095 from the previous price. The decline painfully highlights the distance to the all-time high from 2021: the STORJ token now stands approximately 99% below that peak.

The news fits into a broader trend in which crypto projects from the bull run of 2021 are increasingly struggling to stay financially afloat. Earlier, several crypto exchanges closed their doors, showing that the sector is in full consolidation. Whether the Chapter 11 process will ultimately give Storj Labs the much-needed restart remains to be seen in the coming period.