The Crypto Industry is Facing a Wave of Shutdowns: Token Model Fails, Lack of Restructuring Path

BlockBeats News, April 28th. This year, the cryptocurrency industry is experiencing a wave of shutdowns, impacting projects from exchanges to analytics tools. April was no exception as the decentralized email service Dmail announced the cessation of its operations due to high infrastructure costs, funding failures, and weak token utility. Roshan Dharia, CEO of crypto holding company Echo Base, stated: "In past cycles, projects could prolong their runway through new token issuance or VC support. This path is now largely closed, leading to earlier recognition of losses, resulting more in shutdowns than recoveries." The crypto industry has relied on rapid fundraising through tokens, but lacks a framework for resolution in times of distress, making it difficult to restructure debts or coordinate stakeholders after conditions worsen.

In recent months, with declining user activity, diminishing financial strength, and narrowing funding channels, project conditions have continued to deteriorate. DAO tool platform Tally stated that as the governance tool market has yet to scale, the company is gradually halting operations; Step Finance pivoted to closure after a hack, noting that efforts to secure funding or sell did not yield viable results. BlockFills filed for bankruptcy in March after freezing withdrawals, with creditors accusing the company of misappropriating customer assets to cover losses.

Dharia mentioned that tokens used to be a fallback allowing teams to fundraise or subsidize growth, but this mechanism is no longer dependable. Some projects are beginning to view tokens as debts that may need to be restructured. In March, Across Protocol proposed converting tokens to equity buybacks. The team behind Across, Risk Labs, stated that tokens and decentralized autonomous organization (DAO) structures limited their ability to transact with enterprises and institutions. Unlike traditional companies, most crypto projects lack a clear restructuring path after conditions deteriorate. Crypto projects typically operate through a combination of foundations, offshore entities, and token-based communities, lacking a unified legal structure to govern responsibility. In restructurings, token holders usually do not have formal claims to assets or cash flows.