Eliza Labs founder Shaw Walters has declared the project's native token "completely dead," marking the end of a crypto project that once reached a market capitalization of more than $2.4 billion.
In a lengthy post on X, Walters said the Eliza Foundation is winding down after settling litigation brought by Burwick Law. According to Walters, the project transferred its remaining treasury and available funds to settle claims because it lacked the financial resources to continue fighting the lawsuit.
"The token is dead. Completely," Walters wrote. He added that there will be no foundation support, token buybacks, or supply measures going forward. He also advised holders that there is no recovery plan for the token and said he does not intend to launch another token tied to Eliza in the future.
Lawsuit Led to Settlement
The dispute traces back to a federal class action lawsuit filed in April 2026 in the U.S. District Court for the Southern District of New York. Burwick Law accused Walters, Eliza Labs, and other affiliated parties of false advertising, deceptive business practices, negligent misrepresentation, and unjust enrichment.
The complaint alleged that the project marketed itself as an autonomous AI-managed venture fund while remaining under the control of Walters and other insiders. It also claimed that holders suffered dilution during the migration from $AI16Z to $ELIZAOS after the project rebranded following objections from venture capital firm Andreessen Horowitz over the original $AI16Z name.
Walters rejected those allegations, describing the claims as "ridiculous," but said the team lacked the capital required to continue litigation and instead chose to settle.
From A Billion-Dollar Project To Shutdown
$AI16Z launched on Solana in October 2024 with the goal of creating an AI-managed decentralized venture-style fund. The project later rebranded to ElizaOS while maintaining its focus on the open-source Eliza AI agent framework.
At its peak in January 2025, $AI16Z reached a market capitalization of roughly $2.4 billion.
Today, $ELIZAOS trades at a $2.3 million market cap after falling about 99.5% from its high, while the original $AI16Z token remains listed separately with a market cap of about $390,000.
Walters said he never sold his $AI16Z holdings and claimed he only earned a modest salary comparable to the project's engineers. He added that he once held tokens worth approximately $25 million but watched their value fall instead of selling them.
Mixed reaction across the industry
The announcement sparked debate throughout the crypto community.
Mike Dudas, managing partner at 6th Man Ventures, described the outcome as a situation where lawyers appeared to benefit the most. He argued that the settlement left some plaintiffs with compensation, pushed the token toward zero, and allowed the founder to continue developing the software privately.
Jupiter contributor wassielawyer criticized Burwick Law's litigation strategy, arguing that repeated lawsuits increase legal costs and pressure projects into settlements without reaching trial.
Glenn Rothwell, Head of Business Development for Crypto and Agentic Payments at Rumble, called the situation a warning that launching tokens has become increasingly difficult for legitimate builders.
Not everyone accepted Walters' explanation. Several community members accused him of profiting from other token launches, insider activity, and poor leadership decisions.
Others argued that the project should have abandoned the token earlier instead of attempting the ElizaOS rebrand. Walters responded to one supporter by saying he felt a responsibility to existing holders and believed he was trying to do the right thing.
The shutdown marks the end of one of the most recognizable AI agent token projects of the previous market cycle, even as Eliza Labs says its software development will continue independently of any native token.
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