The crypto startup Entropy is calling it quits, signaling a tough reality for some ventures in the digital asset space. After four years of operation and multiple strategic shifts, the company is returning capital to its investors, citing persistent issues with scalability and an inability to achieve a viable product-market fit.
The Journey and Vision
Entropy launched in late 2021, initially positioning itself as a decentralized self-custody solution. It quickly garnered significant backing, securing $25 million in seed funding in June 2022 from major crypto venture capitalists, including Andreessen Horowitz (a16z) and Coinbase Ventures. The company later pivoted in the second half of 2025, developing an AI-integrated crypto automation platform, conceptualized as a "Zapier for crypto."
Facing Unscalable Challenges
Despite these efforts and substantial investment, Entropy's founder and CEO, Tux Pacific, revealed that the path forward was unsustainable. Initial feedback on their new business model indicated it wasn't scalable for venture capital expectations. After exploring various avenues and enduring two rounds of layoffs, Pacific made the difficult decision to shut down the company. He concluded that after four challenging years in the crypto sector, the best course of action was to cease operations and return capital to investors.
