Key highlights:
- Shaw Walters shared that the Eliza foundation is closing
- The project’s treasury was used to settle a lawsuit with token holders
- ELIZAOS fell over 97% from its all-time high
- Walters said development of the open-source software will continue without the token
The founder of ElizaOS shared surprising news to the crypto community on Wednesday. Shaw Walters, founder of Eliza Labs, told token holders that its ELIZAOS coin is now dead after a legal battle emptied the project’s treasury.
Walters and the open-source ElizaOS AI agent framework announced that the token would no longer get support from the team. He also said the project’s foundation will be shutting down and advised holders to move on.
This came after the coin lost its rep as one of the fast-growing AI crypto projects. The token reached a market cap of around $2.4 billion before crashing by more than 97%.
ElizaOS founder says token is finished
“The token is dead. Completely,” were the words used by the AI firm’s founder. He explained that there would be no token buybacks, supply management, or any sort of effort to boost the token’s price.
I guess I should say something about the token
Look. I worked my ass off to the point I got a frozen shoulder and severe health issues from overworking and typing, and it was never enough
We built cool shit but it was completely ignored because number down
It felt like the…
— Shaw (spirit/acc) (@shawmakesmagic) August 4, 2026
Walter said the team would instead focus on building the software backing ElizaOS without launching another crypto coin.
He also said that the foundation transferred the funds left in its treasury to settle the lawsuit filed by a group of token holders represented by Burwick Law.
The founder described the lawsuit as “ridiculous” and admitted the project did not have enough money to keep fighting the case in court. Walters said he personally held tokens worth $25 million but never sold them, saying he had to watch their value fall close to zero.
After the news, the token dropped over 20% in 24 hours to a record low near $0.0002702. Its market cap also fell to around $2.63 million.
Lawsuit and rebrand changed the project’s future
The legal troubles started in April 2026 when a class-action lawsuit was filed in the U.S. District Court for the Southern District of New York.
The complaints accused Eliza Labs, Walters, and the AI16Z DAO of false advertising, deceptive business practices, negligent misrepresentation, and unjust enrichment. In his latest post, Walters laughed off the accusations.
“The most expensive thing I own is my MacBook. I don’t own a car, I live in a small bedroom in SF with my wife, I write code and work almost all day every day. I don’t desire luxuries or wealth” he said.
Plaintiffs claimed that the project was presented as an autonomous AI-run venture fund but alleged that Walters and other insiders still had control. They also said that investors were harmed during the migration from AI16Z to ElizaOS.
The proposed class claims were then dismissed without prejudice after both sides settled. Walters said the settlement was that the project would hand over what was left in the treasury to the group of token holders.
The project had seen some changes before the lawsuit. It originally launched on Solana in October 2024 under the name AI16Z.
In January 2025, it had to rebrand after venture capital firm Andreessen Horowitz, better known as a16z, raised concerns that the name could confuse investors. The project then later migrated its token from AI16Z to ElizaOS.
From a billion-dollar project to major collapse
The original AI16Z token reached a market cap of $2.4 billion in January 2025, maintaining a daily trading volume of around $290 million at one point. This was when the AI agent sector was a top trend in crypto. This was around late 2024 and early 2025.
In that time, many AI crypto projects saw billions of dollars in market value. But the interest in the sector faded as the bear market started,
At press time, the ElizaOS token trades near $0.0002770 with a market value of just $2.62 million.
The founder further shared that the software itself will continue to move forward.
“I am starting over, since I own the IP, and I am never letting a token come close to Eliza again,” he said. “I’m never going to support an Eliza token.”
Source:: ElizaOS Founder Calls the AI Agent Token "Dead" After Lawsuit Drained Treasury