The Farcaster team plans to refund all $180 million raised from venture investors. This was announced by co-founder Dan Romero.
Given some rumors, wanted to post a few clarifications:
— Dan Romero (@dwr) January 22, 2026
Farcaster is not shutting down. The protocol works and will continue to work. There were 250,000 MAU in December and over 100,000 funded wallets. The acquirer, Neynar, is a venture-backed startup and plans to shift…
The development company Merkle Manufactory raised $30 million from venture firm a16z crypto in 2022. This was followed by another funding round led by Paradigm, which valued the firm at over $1 billion.
According to Romero, Merkle has raised a total of $180 million throughout its existence.
The decision to sell the Farcaster protocol and refund investors was described by him as the result of “five years of development and a commitment to responsibly manage capital.”
Management of the project has been transferred to the decentralized social network infrastructure provider Neynar. The new team intends to shift its focus towards supporting developers.
“Farcaster is not shutting down. The protocol functions and will continue to function. In December, the platform had 250,000 monthly active users and over 100,000 funded wallets,” Romero stated.
Some investors have already confirmed the refund. Among them is early supporter and former Coinbase executive Balaji Srinivasan.
As a Farcaster investor, can confirm: money is coming back to investors.
— Balaji (@balajis) January 22, 2026
Dan and the team built something genuinely amazing, perhaps the best decentralized social protocol. He's independently wealthy from Coinbase, and could have done whatever he wanted, but he decided to spend… https://t.co/ondjUSutKL
“The development of protocols sometimes takes longer than the lifespan of a single company. Transferring management to Neynar may help Farcaster become a truly decentralized social protocol. The technology is real and it works. It just needs a 'killer' application. The project definitely deserves further development,” he commented.
Allegations
Following the announcement of the sale, Injective developer Mirza accused Romero of fraud.
— Mirza 🥷 (@mirza) January 22, 2026
He claimed that the co-founder never intended to launch a viable product. Instead, he allegedly built a “vague and non-functional” project, focusing solely on raising funds.
Romero reportedly leveraged his media presence and connections at Coinbase to create artificial hype.
According to the developer, the funding round from Paradigm only happened due to Romero's friendship with the fund's managing partner, Fred Ersam, with whom he studied.
“In 2024, Dan accomplished the impossible: he convinced Paradigm to lead a $150 million funding round, valuing Farcaster at about $2.5 billion. At that time, according to data, Farcaster had around 80,000 daily active users at its peak,” Mirza noted.
He alleged that after raising funds, Romero withdrew $15 million as “secondary liquidity” for personal gain, and now disguised the failure as a “successful exit.”
The community reacted skeptically to the user's accusations. Many sided with Farcaster's co-founder, pointing out inaccuracies in Mirza's claims.
“Don’t be jealous — the guy just had the right connections and the ability to attract investment. The Farcaster team was quite small. There are hundreds of Web2 project founders who exited with much larger sums and much earlier, limiting their involvement to monthly board meetings,” noted a user under the pseudonym Nate.
Recall that in early January, Romero announced a strategy shift for Farcaster towards wallet development. He explained the decision as a failure of the social media-focused strategy.