PANews reported on January 26, according to The Block, that the decentralized custody startup Entropy, supported by a16z, announced it would shut down and return remaining funds to investors. The company's founder and CEO Tux Pacific stated that after four years of operation, multiple business pivots, and two rounds of layoffs, the company failed to find a business model that met the scale for venture capital.
Entropy completed a $25 million seed round led by a16z crypto in June 2022, with a total funding amount of approximately $27 million. The company was initially positioned as a decentralized alternative to centralized custodians like Fireblocks and Coinbase, but later shifted to developing a crypto automation platform. The founders stated that after initial market feedback indicated that its business model did not meet the scale for venture capital, they decided to cease operations.