Eliza Labs Shuts Down Foundation and Kills Native Token After Class-Action Settlement

Shaw Walters, founder of Eliza Labs, says the project's native token is finished and the Eliza Foundation is shutting down after a class-action settlement exhausted its remaining funds.

In a post on X Tuesday, Walters said the project settled with a group of token holders represented by Burwick Law after deciding it lacked the money to continue fighting the case.

"The token is dead. Completely. The foundation is winding down," Walters wrote. "I am starting over, since I own the IP, and I am never letting a token come close to Eliza again."

The announcement caps the rise and fall of one of crypto's best-known AI agent projects.

Launched on Solana in October 2024 as ai16z, it was pitched as an AI-run decentralized autonomous organization that used the open-source Eliza framework to automate venture capital decisions. The token surged to a market capitalization of about $2.5 billion in January 2025 before the project rebranded to ElizaOS after Andreessen Horowitz objected to its use of the ai16z name.

In April, Burwick Law filed a class-action lawsuit against Eliza Labs in the U.S. District Court for the Southern District of New York, alleging false advertising, deceptive business practices, negligent misrepresentation, and unjust enrichment.

The complaint alleges Walters and Eliza Labs marketed ai16z as the governance token for an autonomous AI-managed venture fund modeled on Andreessen Horowitz when the project was actually controlled by insiders. It also alleges the project improperly used the venture firm's branding, forcing a rebrand to ElizaOS, and later expanded the token supply from 1.1 billion to 11 billion during a migration that diluted existing holders.

Walters said the settlement consumed the foundation's remaining treasury and available cash.

"Their claim was ridiculous, but we didn't have the capital to legally fight it so we settled on giving them the rest of what we had," he wrote.

Walters said the lawsuit—and the culture surrounding speculative crypto tokens—convinced him to abandon tokenization.

"I don't own any tokens. I don't support any of it," he wrote. "I love the technology and I'll come back one day when the culture has grown past this point."

Walters also denied personally profiting from the project, and earned only a modest salary comparable to the company's other engineers.

Despite abandoning the token, Walters said development of ElizaOS will continue.

“Gonna keep building no matter what, every single day, and I’m not gonna stop until we live in a world where we each own our own data and we don’t have to pay to be smart,” Walters wrote. “That’s the mission.”

Now, Walters says Eliza's future will be built without a token.

Walters ended the message, declaring, "Eliza is dead. Long live Eliza.”