Shaw Walters, founder of Eliza Labs, declared the ELIZAOS token "dead" in a post on X on 4 Aug after settling a US class action. He also stated that the ElizaOS Foundation is winding down. The statement came hours after he told followers on X that his team is raising capital for the Eliza open-source AI software.
ElizaOS Founder Declares Token "Dead" Due to Lawsuit Settlement
5 August 2026 - 16:10 UTC
By Isabelle Castro
Walters wrote that the foundation had handed over "the rest of the treasury and all the money we had" to a group of token holders represented by Burwick Law. He called the claim "ridiculous" but said the project lacked the capital to fight it.
How the DAO became an AI platform
ElizaOS originally launched on Solana on 24 Oct 2024 under the name ai16z as a DAO pitched as a venture-style investment fund run by artificial intelligence. Token holders were invited to propose and vote on investment ideas and buybacks alongside an AI agent called "Marc AIndreessen," a parody of the Andreessen Horowitz co-founder. Running underneath the fund was the asset that outlived it, an open-source framework for building AI agents.
Shortly after the token peaked at a valuation of $2.6bn on 2 Jan 2025, Andreessen Horowitz, commonly known by its own shorthand a16z, demanded the company change its original name over the resemblance to its own. Walters announced the rebrand to ElizaOS in the project Discord on 26 Jan 2025, repositioning it as a platform for creating and deploying AI agents rather than an investment vehicle.
How the settlement drained the treasury
Burwick Law filed a lawsuit on 16 Apr, naming Walters, Eliza Labs Inc., Sebastian Quinn-Watson and ai16z DAO among the defendants, according to the firm's own case filing. The complaint accused the project of deceptive practices and false advertising, alleging the project was marketed as governed by an autonomous AI agent while being operated manually. The law firm demanded a court order treating the foundation's treasury as money owed to investors.
The complaint also challenged the migration from ai16z to ELIZAOS, claiming the process diluted existing holders.
No settlement terms beyond Walters' own account in his X post have appeared in public filings as of 5 Aug, and Burwick Law has not issued a statement. The law firm did not respond immediately to Sandmark's request for comment.
Walters told holders to expect no buybacks and no treasury support, and said he no longer owns any tokens.
"If I am a scammer then I am the dumbest and worst scammer ever, because I had $25m in my wallet and I coulda dumped on all of you and I ran it to 0," he wrote. He also described developing a frozen shoulder and other health problems from overwork, and said the team's technical output was ignored while the token price fell.
Burwick's complaint does not centre its insider-trading allegations on Walters' own holdings. It cites onchain analysis of other wallets, including one linked to an ai16z partner known as "Logan," alleged to have sold a position shortly before a market-moving announcement. Whether Walters personally profited and whether people close to him did are separate questions, and the settlement, as described so far, does not appear to resolve either one on the public record.
The project's collapse follows a pattern Sandmark has tracked elsewhere this year, from Movement Labs' Chapter 11 filing after its own token turmoil to the governance failures exposed by the BonkDAO drain: projects built on DAO structures that struggle to separate founder conduct from collective governance once something goes wrong.
What Walters says comes next
On the same day he announced the death of the token and its associated foundation, Walters wrote in a separate post on X that Eliza is "looking to collaborate with robotics, physical AI and hardware companies," describing a Linux-based agentic operating system that is MIT licensed and fully white labeled. The project opened eliza.army, a contributor program paying from a $10k monthly pool in USDC, on the same day. In a post published earlier that day he said that the team is raising capital.
Nothing in Walters' posts or in public records so far shows whether that raise involves a different legal entity from the foundation now winding down, or what happens to ElizaOS's existing assets, contributors and open-source repositories under the new structure, if anything changes at all.
Walters said he would return to crypto only once the culture matures, calling the industry "absolute trash" and saying he is bearish on the market. He compared it with the AI sector, where he said people are building rather than "cutting people down".
Walters did not respond immediately to Sandmark's request for comment, including on whether the new raise involves a separate entity from the wound-down foundation.
