In a move that could point to more troubled times ahead for the company, P2P file sharing service BitTorrent rescinded what's left of $17 million in financing to investors, for a smaller round of funding, according to technology blog TechCrunch.

An investor of the company said that the Series C round of financing, which closed in the summer, was being undone and returned to investors DCM, Accel Partners and DAG Ventures. The company admitted that their business was "not gaining sufficient traction," but has closed a new $7 million round of financing from those same investors at a "substantially reduced" valuation of $28 million, according to TechCrunch, which has an excerpt from a letter sent to shareholders.

Last month, BitTorrent's CEO and co-founder, Ashwin Navin, left the company around the same time that half the staffers, 18 in total, were let go. This came after the staff was reduced by 20 percent in August.