Entropy, supported by a16z, will shut down and return remaining funds to investors

On January 26, blockchain outlet The Block reported that Entropy—a decentralized custody startup backed by a16z—has announced it will wind down operations and return remaining funds to investors. Entropy founder and CEO Tux Pacific noted that after four years in operation, multiple business pivots, and two rounds of layoffs, the firm failed to identify a business model that could scale to meet venture capital expectations. The decision to cease operations came after initial market feedback signaled its model wouldn’t work for VC-scale growth. Entropy reportedly raised roughly $27 million total, including a $25 million seed round led by a16z Crypto in June 2022. The firm initially positioned itself as a decentralized alternative to centralized custody providers like Fireblocks and Coinbase, later pivoting to building a crypto automation platform.