Crypto Startup Entropy Shuts Down, Returns Investor Capital

Crypto startup Entropy is winding down operations and returning funds to investors after failing to reach scale or secure a working business model. Founder and CEO Tux Pacific confirmed the decision in a public post on X over the weekend, ending a four year effort backed by major venture firms.

Entropy launched in late 2021 and spent its life searching for a product that could grow beyond a niche user base. Despite multiple pivots, the company did not find steady demand that justified continued funding.

Why the Shutdown?

Entropy raised $25 million in seed funding in June 2022. The round included backing from Andreessen Horowitz and Coinbase Ventures. The project initially focused on decentralized self custody tools, targeting users who wanted full control of digital assets.

That product failed to gain enough traction. The company shifted direction several times and cut staff twice in an attempt to reduce burn and reset priorities. None of those changes led to sustained growth.

Pacific said the platform did not show signs of becoming a large business. Without a clear revenue path, the company chose to shut down rather than seek more funding.

Final Pivot Fell Short

In the second half of 2025, Entropy made its last major shift. The team built a crypto automation platform tied to artificial intelligence. The goal was to mirror tools like Zapier, but with onchain actions and smart wallet control.

Early feedback was negative. According to Pacific, users saw the tool as useful but not large enough to support venture scale returns. That assessment left the company with limited options.

Rather than attempt another rebuild, Entropy chose to close and return remaining funds. Pacific said the team had already delivered the best version of the product it could build.

Entropy is not the only venture backed crypto project pulling back. Earlier this week, decentralized social protocol Farcaster said it would return $180 million to investors following a takeover by infrastructure firm Neynar.

Farcaster co founder Dan Romero said the platform is not shutting down. Neynar will focus the project on developers while Farcaster continues to operate with active users.