A16z-backed decentralized custody startup Entropy announces shutdown and refunds investors

Mars Finance reports that the decentralized custody startup Entropy, led by a16z, has announced its closure and is returning remaining funds to investors. Entropy founder and CEO Tux Pacific stated on the X platform that the decision was made after four years of product development, multiple business adjustments, and two rounds of layoffs. Entropy was positioned as an alternative to centralized crypto custody institutions, utilizing technologies such as multi-party computation, threshold cryptography, and trusted execution environments to provide users with cross-chain asset management and automated signing services. The company completed a $25 million seed round in 2022 led by a16z, with participating investors including Dragonfly, Variant, Coinbase Ventures, among others, totaling approximately $27 million in funding. Pacific said that after recent research, they found that this business model was difficult to support risk investment-level growth, so they chose to cease operations and return capital. This event also reflects the tightening survival environment for crypto startups since 2025.