Andreessen Horowitz-Backed Entropy Announces Shutdown

TheNewsCryptoPublished on 2026-01-26Last updated on 2026-01-26

Abstract

Decentralized crypto custody startup Entropy, backed by Andreessen Horowitz (a16z), is shutting down and returning remaining capital to investors, according to founder and CEO Tux Pacific. After four years, multiple pivots, and two rounds of layoffs, Pacific announced the decision on January 25. The company had recently shifted to a crypto automation platform but failed to meet venture-scale growth expectations. Entropy raised $25 million in a 2022 seed round led by a16z crypto, with participation from Dragonfly Capital, Coinbase Ventures, and others. Initially offering a decentralized alternative to custody providers like Fireblocks, the startup ultimately could not achieve sustainable growth. Pacific expressed gratitude to investors and indicated a personal shift away from crypto towards pharmaceuticals.

A decentralised crypto custody startup supported by Andreessen Horowitz (a16z), Entropy is terminating and plans to return the rest of the capital to investors, as per the founder and CEO Tux Pacific.

Pacific publicised through writing on X on January 25 that, “I am winding up Entropy, and after four years, various pivots and two rounds of layoffs, I have decided to terminate Entropy and return capital to the investors.”

The termination is followed by a late-stage push last year to reposition the firm around a crypto automation platform, which Pacific referred to as “basically n8n/Zapier/etc. for crypto”, having automated signing through threshold cryptography, safe computation leveraging trusted execution environments, and deep AI amalgamations.

That product direction was still not able to clear a venture-style growth bar. After the first feedback request disclosed that the business model was not venture scale, Pacific said that he was left with the choice to navigate a creative way forward or pivot once more.

The Heartful Gratitude

Entropy first captivated attention in 2022 when it generated $25 million in a seed round headed by a16z crypto, and the participants were Dragonfly Capital, Coinbase Ventures, Robot Ventures, Ethereal Ventures, Variant and Inflection. Before this, the company had so far accumulated $1.95 million in a pre-seed round.

At rollout, Entropy pitched itself as a decentralised alternative to custody providers like Fireblocks and Coinbase, depending on cryptographic approaches such as multi-party computation to allow users to control how funds move, comprising rule-based constraints.

Pacific also showed gratitude towards a16z crypto and Guy Wuollet for aiding in steering the wind-down and called their guidance “invaluable”. Pacific has also mentioned that they plan to step back before deciding what comes after Entropy.

He added that my time in crypto might be coming to a conclusion, as I feel myself drawn mainly into pharmaceuticals, and they want to work on hormone delivery and validate research on new oestradiol drug formulations.

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