Summary
- Shaw Walters, the founder of Eliza Labs, has declared the Eliza token "dead" and is shutting down the project's foundation.
- The decision follows the use of the remaining treasury to settle a class-action lawsuit from Burwick Law.
- Walters indicated that Eliza will no longer have a native token and will concentrate on developing the open-source ElizaOS AI agent framework.
Shaw Walters, who leads Eliza Labs, has announced that the Eliza token is effectively over, and the Eliza Foundation is closing its doors after settling a class-action lawsuit that depleted its funds.
In a statement on X, Walters disclosed that the project reached a settlement with token holders represented by Burwick Law, as it could not afford to continue the legal battle.
"The token is dead. Completely. The foundation is winding down," Walters stated. "I am starting over, as I own the IP, and I will never allow a token to be associated with Eliza again."
This marks a significant decline for one of the more prominent projects in the AI and cryptocurrency space.
Initially launched on the Solana blockchain in October 2024 as ai16z, it was envisioned as an AI-driven decentralized autonomous organization utilizing the Eliza framework to streamline venture capital decisions. The token's market cap soared to approximately $2.5 billion in January 2025 before the project underwent a rebranding to ElizaOS after Andreessen Horowitz raised concerns about the use of the ai16z name.
A class-action lawsuit was filed by Burwick Law in April against Eliza Labs in the Southern District of New York, alleging false advertising, deceptive practices, negligent misrepresentation, and unjust enrichment.
The lawsuit claimed that Walters and Eliza Labs misrepresented ai16z as the governance token for an autonomous AI-managed venture fund, while it was actually controlled by insiders. It also accused the project of misusing the venture firm's branding, leading to the rebranding to ElizaOS, and of increasing the token supply from 1.1 billion to 11 billion, which diluted existing token holders' stakes.
Walters mentioned that the settlement consumed the last of the foundation's treasury and available cash.
"Their claim was absurd, but we lacked the resources to legally contest it, so we decided to settle by giving them whatever funds we had left," he explained.
He expressed that the lawsuit and the overall environment surrounding speculative crypto tokens led him to abandon the concept of tokenization.
"I don't possess any tokens. I do not endorse any of it," he remarked. "I appreciate the technology and plan to return once the culture evolves beyond this phase."
Walters also refuted claims of personally profiting from the initiative, stating that he received a modest salary comparable to other engineers in the company.
Despite discontinuing the token, he affirmed that work on ElizaOS will persist.
“I will continue building every day, and I won’t stop until we reach a point where everyone owns their data and we don’t have to pay for intelligence,” Walters asserted. “That’s our mission.”
Walters concluded by stating that Eliza's future will be developed without a token.
He ended his message with, "Eliza is dead. Long live Eliza.”