Shaw Walters, founder of Eliza Labs and the open-source ElizaOS framework, has declared the Eliza token “dead” and confirmed that the project’s foundation is being wound down after settling a legal dispute by transferring its remaining treasury and available funds to a group of token holders.
Walters said on X that the settlement followed a federal lawsuit brought by Burwick Law. He said Eliza could not afford to continue contesting the case, despite believing the claims against the project lacked merit. Under the agreement, he said, “the rest of the treasury and all the money” held by the foundation was transferred to token holders.
The settlement brings an end to official foundation support for the token but does not stop development of ElizaOS. Walters said the open-source software would continue under his control because he owns the underlying intellectual property. He also ruled out creating or supporting another token associated with Eliza.
Burwick Law filed a class action lawsuit in April in the U.S. District Court for the Southern District of New York against Walters, Eliza Labs and other affiliated parties. The complaint alleged false advertising, deceptive acts and practices, negligent misrepresentation and unjust enrichment.
The lawsuit claimed Eliza had presented itself as an autonomous, AI-managed venture fund governed by an independent AI agent, while allegedly remaining under the control of Walters and other insiders. It also questioned the project’s move from ai16z to ElizaOS, arguing that the token migration diluted existing holders after venture capital firm Andreessen Horowitz objected to the original ai16z branding.
Walters said the project did not have the financial resources to maintain the legal challenge and therefore agreed to hand over the remaining treasury. He rejected claims that he had personally profited from the project, saying he had never sold his ai16z holdings and had received only a modest salary comparable with those paid to other engineers on the team.
With the foundation closing, Walters said token holders should not expect buybacks, treasury support or any other mechanism intended to support the token’s price.
He described the asset as “completely ngmi”, said he no longer owned any tokens and made clear that he would not support it in future. Walters advised holders either to sell their tokens or manage them independently, because there would no longer be a foundation able to provide financial backing.
He also blamed what he characterised as a speculative trading culture and persistent criticism from parts of the cryptocurrency community for his decision to step away from token-based projects. Walters argued that much of the criticism had come from investors unwilling to accept losses linked to speculative trading, rather than from people primarily interested in the technology.
Any future work connected to Eliza, he said, would remain separate from cryptocurrency assets.
The decision follows ElizaOS’s stated direction earlier in 2025. In January, the project released a technical whitepaper describing ElizaOS as an open-source operating system for AI agents capable of interacting with blockchain networks, smart contracts and decentralised applications.
Its modular design consists of a Runtime, Adapter, Character, Client and Plugin system. That structure allows developers to customise AI agents without changing the core software. The framework supports ecosystems including Solana, Ethereum and TON, as well as AI models from OpenAI, Llama and Qwen.
The roadmap also included Hierarchical Task Networks, a planning system designed to allow AI agents to divide complex objectives into smaller, executable tasks.
The project launched on Solana in October 2024 under the name ai16z. It was initially presented as an AI-managed decentralised autonomous organisation and venture-style investment fund, with an autonomous AI agent intended to help guide investment decisions and governance.
Following its rebrand to ElizaOS in early 2025, the project broadened its identity and positioned itself as a platform for creating, deploying and managing AI agents rather than as a single AI-managed investment vehicle.
The transition increased the token supply from 6.6 billion to 11 billion units, while the circulating supply rose to about 7.4 billion tokens, according to documentation released during the migration. Developers said the expanded platform would allow AI agents to be created, tokenised and deployed for different uses while development of the open-source framework continued.
Although the foundation is being wound down, Walters said engineering work on ElizaOS would carry on. He said developing artificial intelligence was more constructive than operating in the current cryptocurrency environment and that his team would continue building Eliza every day without returning to a foundation-backed token model.
His long-term aim, he added, is to create open-source AI-agent software that gives users greater control over their data and supports locally operated, crypto-enabled AI agents. Even if another open-source project eventually surpasses Eliza, Walters said the team would continue contributing to whichever effort makes the greatest progress in the technology.
