Eliza Labs founder Shaw Walters announced the shutdown of the ELIZAOS Foundation and advised token holders to sell, effectively bringing an end to the token that emerged after the AI16Z rebrand and migration. The project’s decline followed a lawsuit, a name change, and a collapse of nearly 97% from its peak valuation.
About 19 months after AI16Z reached a $2.4 billion market capitalization, Walters declared its successor token ELIZAOS “dead” and urged remaining holders to exit their positions.
Walters, the founder of Eliza Labs and creator of the open-source ElizaOS AI agent framework, said the ELIZAOS token would no longer receive support and that the foundation behind it would be dissolved.
“The token is dead. Completely,” Walters said in a post on X. He confirmed there would be no additional foundation support, token buybacks, or supply management efforts, adding that he plans to continue developing the underlying software without creating another cryptocurrency.
Walters said the project’s technical progress was overshadowed by market sentiment, claiming that despite significant development work, the community’s focus remained largely tied to token performance rather than the technology itself.
ELIZAOS was trading around $0.00031, with a market capitalization of roughly $2.3 million, down about 97% from its previous peak. The token replaced AI16Z through a migration process after the original project faced naming concerns. AI16Z reached a market cap of approximately $2.39 billion on Jan. 2, 2025, with daily trading volume peaking at $291 million. The abandoned AI16Z token contract remains listed separately on CoinGecko with a market value of around $375,000.
Walters said legal issues were a major factor behind the foundation’s closure. According to him, remaining treasury funds and available resources were transferred as part of a settlement agreement with a group of 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, deceptive business practices, negligent misrepresentation, and unjust enrichment. The complaint alleged that AI16Z promoted itself as an “autonomous, AI-run venture fund” despite being controlled by Walters and other insiders. It also claimed investors were negatively impacted during the transition from AI16Z to ELIZAOS.
The rebranding effort followed objections from venture capital firm Andreessen Horowitz, also known as a16z, over the similarity between the AI16Z name and the firm’s branding.
Walters criticized the legal action, saying the claims were unfounded but that the project lacked the financial resources needed for a prolonged legal battle. He also revealed that he once held tokens valued at around $25 million, only to watch their value fall close to zero.
Eliza Labs and Burwick Law did not immediately respond to requests for information regarding the settlement terms, the status of the lawsuit, or the outcome of the original daos.fun investment vehicle.
The rise and decline of AI agent tokens
AI16Z launched on Solana in October 2024 with the goal of creating an AI-managed venture fund where the agent would make investment decisions and token holders would participate as stakeholders. By late December, its daos.fun fund had accumulated more than $22 million in user-deposited tokens and was scheduled to expire in October 2025.
The AI agent crypto sector gained popularity after Truth Terminal, an AI-powered account operated by New Zealand researcher Andy Ayrey, attracted attention on X for generating unusual and experimental content. The project later received a $50,000 bitcoin donation from a16z founder Marc Andreessen in July 2024. A separate developer launched the GOAT token inspired by the concept in October, and the cryptocurrency quickly reached a $1.2 billion valuation.
The sector expanded around the idea that autonomous AI agents could control wallets, publish content, interact online, and launch tokens tied to their activity and perceived value. Projects such as Virtuals Protocol allowed users to create AI agents, while AI16Z focused on an AI system capable of managing investment decisions.
By early 2025, AI agent tokens had become one of crypto’s fastest-growing narratives, fueled by autonomous bots interacting across social platforms and launching new tokens. At its peak, the sector reached several billion dollars in value, with AI16Z and Virtuals accounting for a significant share of the market.
