Eliza Labs founder Shaw Walters announced that the ELIZAOS Foundation is shutting down and advised token holders to sell their holdings, effectively ending the project’s token after a legal dispute, rebranding effort, and a 97% decline from its peak value.
Around 19 months after AI16Z reached a $2.4 billion market capitalization, the founder behind the project has declared its successor token, ELIZAOS, effectively finished and urged investors to exit their positions.
Walters, who created Eliza Labs and the open-source ElizaOS AI agent framework, said the ELIZAOS token has reached its end and that the foundation responsible for supporting it will be dissolved.
“The token is dead. Completely,” Walters wrote on X on Wednesday. He said the project would receive no further foundation backing, buybacks, or supply-related initiatives, adding that he intends to continue developing the software without introducing another token.
Walters said the decision followed months of effort that failed to translate into market support. He claimed that despite building useful technology, the project was largely ignored as investors focused primarily on token prices.
ELIZAOS was trading near $0.00031, with a market value of approximately $2.3 million, representing a 97% decline from its previous high. The token replaced AI16Z through a migration process. AI16Z reached a peak market capitalization of $2.39 billion on Jan. 2, 2025, when daily trading volume hit $291 million. The original AI16Z contract remains separately listed on CoinGecko with a market cap of about $375,000.
Walters attributed the shutdown primarily to legal expenses. He said the foundation moved its remaining treasury assets and available funds toward settling a dispute with a group of token holders represented by Burwick Law.
The group filed a proposed class-action lawsuit in the Southern District of New York in April, accusing the project of false advertising, misleading practices, negligent misrepresentation, and unjust enrichment. The lawsuit alleged that the project promoted itself as an “autonomous, AI-run venture fund” while Walters and other insiders maintained control. It also claimed holders were negatively affected during the transition from AI16Z to ELIZAOS.
The rebranding process was partly driven by concerns from venture capital firm Andreessen Horowitz, also known as a16z, over the original AI16Z name.
Walters criticized the lawsuit, saying the claims lacked merit but that the project did not have enough resources to fight the case in court. He added that he previously held tokens worth around $25 million, only to see their value collapse.
Eliza Labs and Burwick Law did not immediately respond to requests for details regarding the settlement, the status of the lawsuit, or the outcome of the original daos.fun investment vehicle.
AI agent tokens rise and fall
AI16Z launched on Solana in October 2024 with a vision of creating an AI-powered investment fund where the agent would manage investments and token holders would participate as stakeholders. By late December, the project’s daos.fun fund had accumulated more than $22 million in user-provided tokens and was scheduled to expire in October 2025.
The AI agent token trend gained momentum after Truth Terminal, an account operated by New Zealand researcher Andy Ayrey, gained attention on X for posting unusual AI-generated content. The project received a $50,000 bitcoin donation from a16z founder Marc Andreessen in July 2024. A separate developer later launched the GOAT token based on the concept in October, with the cryptocurrency reaching a $1.2 billion valuation within days.
The sector grew around the idea that autonomous software agents could manage wallets, publish content, interact online, and have tokens valued based on their activities and future potential. Projects such as Virtuals Protocol on Base enabled users to create AI agents, while AI16Z focused on allowing an AI agent to make investment decisions.
The trend accelerated as AI-powered bots became common across Crypto Twitter, with some agents even launching tokens themselves. By early 2025, AI agent cryptocurrencies had grown into a multi-billion-dollar market, with AI16Z and Virtuals representing a significant portion of the sector’s total value.
About The Author
More Stories
JPMorgan Warns Hyperliquid ETF Momentum Has Slowed as Rival Products Gain Ground
Sandisk and Western Digital’s 10% Drop Sparks Market Concerns Over Bitcoin’s Next Move
Bitcoin and Ether Gain Ground as Investors Return to Crypto’s Biggest Assets