The cryptocurrency sector is absorbing another wave of shutdowns and bankruptcies as decentralized storage provider Storj Labs files for Chapter 11 protection and crypto exchange BitMart announces it will cease operations. The developments extend a punishing run of failures that has already claimed multiple industry participants in recent days and wiped significant value from related tokens.
Storj Labs filed for voluntary Chapter 11 bankruptcy on July 26 in a bid to resolve legacy liabilities, The Block reported. The filing triggered an immediate sell-off in the company’s STORJ token, which The Block said dropped 19% to $0.06. CoinDesk separately reported that the token slid 16%, adding that the decentralized data storage company has emphasized its operations will continue throughout the restructuring process despite the price decline.
What makes the Storj case particularly notable is the company’s proposal to convert token holdings into equity. According to CoinDesk, Storj has suggested that token holders take stakes in the restructured business—a maneuver described as unusual for a crypto bankruptcy. If approved by the court, the arrangement would give investors a direct ownership interest in the reorganized entity rather than the far more common outcome of token holders being treated as unsecured creditors with minimal recovery prospects. The proposal reflects an attempt to align the project’s original decentralized community with the corporate structure required to emerge from Chapter 11.
While Storj pursues an unconventional path through bankruptcy court, the exchange sector is facing a more terminal fate. Decrypt reported that BitMart is shutting down entirely, with the exchange blaming the deteriorating market environment and its “future strategic direction” for the decision. The closure comes just days after crypto perpetuals exchange BitMEX also shut down, signaling that the pain is spreading from token projects to the centralized infrastructure layer that supports trading activity.
Industry observers note that the simultaneous stress reflects a broader commercial contraction following years of aggressive expansion during previous bull markets. As Storj attempts to navigate Chapter 11 with its novel equity-for-tokens proposal, and BitMart exits the market entirely rather than seeking to reorganize, the incidents underscore how mounting legacy liabilities and persistently weak revenue streams are forcing firms to choose between drastic restructuring and complete closure. CoinDesk noted that the Storj filing extends a week of crypto failures, reinforcing the sense that the current downturn continues to claim victims across both decentralized protocols and centralized service providers.