Shaw Walters, founder of Eliza Labs, announced Tuesday on X that the Eliza token is 'dead' and the Eliza Foundation is shutting down. The announcement followed a class-action lawsuit settlement with token holders represented by Burwick Law that exhausted the project's remaining treasury funds. The development marks the end of one of crypto's prominent AI agent projects that launched on Solana in October 2024 and reached a market capitalization of about $2.5 billion in January 2025 before facing legal challenges and a forced rebrand.
Burwick Law Settlement Exhausts Foundation Treasury
Walters said in his X post Tuesday that the project settled with a group of token holders represented by Burwick Law after determining it lacked sufficient funds to continue legal defense. "Their claim was ridiculous, but we didn't have the capital to legally fight it so we settled on giving them the rest of what we had," Walters wrote. The settlement consumed the foundation's remaining treasury and available cash. Walters stated, "The token is dead. Completely. The foundation is winding down."
ai16z Launched October 2024 and Peaked at $2.5 Billion
The project launched on Solana in October 2024 as ai16z, pitched as an AI-run decentralized autonomous organization using the open-source Eliza framework to automate venture capital decisions. The token surged to a market capitalization of about $2.5 billion in January 2025. The project later rebranded to ElizaOS after Andreessen Horowitz objected to its use of the ai16z name.
Lawsuit Alleged False Advertising and Deceptive Practices
In April, Burwick Law filed a class-action lawsuit against Eliza Labs in the U.S. District Court for the Southern District of New York. The complaint alleged false advertising, deceptive business practices, negligent misrepresentation, and unjust enrichment. The lawsuit alleged Walters and Eliza Labs marketed ai16z as the governance token for an autonomous AI-managed venture fund modeled on Andreessen Horowitz when the project was actually controlled by insiders. The complaint also alleged the project improperly used the venture firm's branding, forcing the rebrand to ElizaOS, and later expanded the token supply from 1.1 billion to 11 billion during a migration that diluted existing holders.
Walters Says ElizaOS Development Will Continue Without Token
Walters said the lawsuit and crypto token culture convinced him to abandon tokenization. "I don't own any tokens. I don't support any of it," he wrote. "I love the technology and I'll come back one day when the culture has grown past this point." Walters also denied personally profiting from the project, stating he earned only a modest salary comparable to the company's other engineers. Despite abandoning the token, Walters said development of ElizaOS will continue. "Gonna keep building no matter what, every single day, and I'm not gonna stop until we live in a world where we each own our own data and we don't have to pay to be smart," Walters wrote. Walters stated he owns the IP and declared, "I am starting over, since I own the IP, and I am never letting a token come close to Eliza again." He ended the message with "Eliza is dead. Long live Eliza."
FAQ
What did Shaw Walters announce about the Eliza token on Tuesday?
Shaw Walters announced on X Tuesday that the Eliza token is "dead" and the Eliza Foundation is shutting down after a class-action lawsuit settlement with token holders represented by Burwick Law exhausted the project's remaining treasury funds.
When did the ai16z project launch and what was its peak market capitalization?
The project launched on Solana in October 2024 as ai16z and reached a market capitalization of about $2.5 billion in January 2025 before rebranding to ElizaOS.
What allegations did Burwick Law make in the April lawsuit?
Burwick Law filed a class-action lawsuit in April in the U.S. District Court for the Southern District of New York alleging false advertising, deceptive business practices, negligent misrepresentation, and unjust enrichment. The complaint alleged Walters and Eliza Labs marketed ai16z as an autonomous AI-managed venture fund when it was actually controlled by insiders, and that the token supply was expanded from 1.1 billion to 11 billion during a migration that diluted existing holders.
