Farcaster's founders will refund $180 million to investors after selling the protocol to Neynar, addressing concerns and allegations.
The Farcaster team has decided to refund the entire $180 million raised from investors, according to co-founder Dan Romero. This announcement comes amidst a transition of the protocol's management to Neynar, a venture-backed startup.
Romero clarified that Farcaster is not shutting down, stating, “The protocol functions and will continue to function. In December, the platform had 250,000 monthly active users and over 100,000 funded wallets.”
Merkle Manufactory, the development company behind Farcaster, had previously raised $30 million from a16z crypto in 2022, followed by another round led by Paradigm, which valued the company at over $1 billion. Throughout its existence, Merkle raised a total of $180 million.
Romero described the decision to sell the protocol and issue refunds as a responsible management move following five years of development. Neynar will now focus on supporting developers within the decentralized social network framework.
Balaji Srinivasan, an early supporter and former Coinbase executive, confirmed the refund, praising Romero for his efforts: “Dan and the team built something genuinely amazing.”
However, the announcement has not been without controversy. Mirza, a developer with Injective, accused Romero of fraud, claiming he never intended to launch a functional product and instead focused on fundraising. Mirza alleged that Romero used his connections at Coinbase to create hype and that the funding from Paradigm was due to personal ties.
Despite these accusations, many in the community defended Romero, highlighting the inaccuracies in Mirza's claims. Some pointed out that the Farcaster team was small and that many Web2 founders have exited with larger sums without facing similar scrutiny.
Earlier this month, Romero indicated a strategic shift for Farcaster, moving towards wallet development after deeming the social media focus unsuccessful.
