Eliza Labs founder Shaw Walters has announced the closure of the ELIZAOS Foundation and advised token holders to sell, marking the end of the project’s cryptocurrency following a lawsuit, rebrand, and a sharp 97% decline from its peak valuation.
Roughly 19 months after AI16Z reached a $2.4 billion market capitalization, Walters, the creator of the project’s successor token ELIZAOS, said the token is effectively finished and encouraged holders to move on.
Walters, who founded Eliza Labs and developed the open-source ElizaOS AI agent framework, confirmed that the ELIZAOS Foundation will shut down and that the token will no longer receive official support.
“The token is dead. Completely,” Walters wrote on X. He said the project would not pursue additional foundation support, buybacks, or supply adjustments, and added that he plans to continue building the ElizaOS software without launching another token.
The founder said the project’s development efforts were overshadowed by market performance, arguing that the community largely judged progress through token prices rather than the technology being created.
ELIZAOS was trading near $0.00031, with a market capitalization of approximately $2.3 million, down 97% from its all-time high. The token was introduced as a replacement for AI16Z following a migration process. AI16Z reached a peak valuation of $2.39 billion on Jan. 2, 2025, with daily trading volume reaching $291 million. The original AI16Z contract remains separately tracked on CoinGecko, with a market cap of about $375,000.
Walters said the foundation’s shutdown was largely driven by legal challenges. He stated that the remaining treasury funds and available assets were transferred as part of a settlement with token holders represented by Burwick Law.
The legal group filed a proposed class-action lawsuit in the Southern District of New York in April, alleging false advertising, deceptive practices, negligent misrepresentation, and unjust enrichment. The lawsuit claimed the project promoted itself as an “autonomous, AI-run venture fund” while Walters and other insiders maintained control over key decisions. It also alleged that token holders suffered losses during the migration from AI16Z to ELIZAOS.
The transition to the ELIZAOS name came after objections from venture capital firm Andreessen Horowitz, commonly known as a16z, over the original AI16Z branding.
Walters said the legal claims were without merit but acknowledged that the project lacked the financial resources needed to challenge the case. He also revealed that he once held tokens worth around $25 million, but their value later dropped close to zero.
Eliza Labs and Burwick Law have not yet provided details about the settlement agreement, the current status of the lawsuit, or the outcome of the original daos.fun investment vehicle.
AI agent token boom fades
AI16Z launched on Solana in October 2024 with the goal of creating an AI-powered investment fund where an autonomous agent would manage investments and token holders would participate as partners. By late December, its daos.fun vehicle had accumulated more than $22 million in user-supplied assets and was scheduled to expire in October 2025.
The AI agent token narrative gained traction after Truth Terminal, an AI-driven account operated by New Zealand researcher Andy Ayrey, gained attention for its unusual posts on X. The project received a $50,000 bitcoin donation from a16z founder Marc Andreessen in July 2024. A separate developer later introduced the GOAT token based on the concept, and the cryptocurrency reached a $1.2 billion market value within days.
The sector grew around the idea that AI agents could independently manage wallets, create online content, interact with users, and issue tokens tied to their activities. Projects such as Virtuals Protocol enabled users to launch AI agents, while AI16Z aimed to take the concept further by allowing an AI system to make investment decisions.
As AI-powered bots spread across crypto communities, the sector gained significant attention in early 2025. AI16Z and Virtuals became two of the largest projects in the category, helping push the AI agent token market into the multi-billion-dollar range before sentiment weakened.
