Entropy, a16z-backed decentralized custody startup, is winding down and returning capital to investors

Entropy, a decentralized custody startup that raised $25 million in a seed round led by Andreessen Horowitz in 2022, is shutting down and returning capital to investors, founder and CEO Tux Pacific announced on X.

Pacific said the decision came after four years of building, “several pivots, and two rounds of layoffs.” The company was most recently developing a crypto automations platform, described as similar to n8n or Zapier but designed for crypto, featuring automated signing using threshold cryptography, secure computation via trusted execution environments (TEEs), and AI integrations.

“After an initial feedback request revealed that the business model wasn’t venture scale, I was left with the choice to find a creative way forward or pivot once more,” Pacific wrote. “After four hard years working in crypto, I decided that the best I could do has already been done: it was time to close up shop.”

Entropy raised its $25 million seed round in June 2022, with participation from Dragonfly Capital, Ethereal Ventures, Variant, Coinbase Ventures, Robot Ventures, Inflection, and the Komerabi Fund. The company had also raised a $1.95 million pre-seed round earlier that year in January, bringing total funding to approximately $27 million.

Pacific, a self-taught cryptographer who previously worked at NuCypher, founded Entropy in 2021. The founder’s unconventional background drew attention when Entropy first raised: Pacific is a college dropout, a transgender advocate, and a self-described “anti-capitalist anarchist” who nonetheless believes in free-market principles rooted in Bitcoin’s early days.

The startup was originally positioned as a decentralized alternative to centralized crypto custodians like Fireblocks and Coinbase. Entropy leveraged cryptographic techniques based on multiparty computation to allow users to deposit and manage cryptocurrencies across blockchains while implementing their own rules for interacting with funds, such as time-gated constraints.

Despite their anti-capitalist politics, Pacific found a home in crypto. “I’ve never felt I’ve been in a space where it’s been more acceptable for people to be so different,” Pacific told TechCrunch in 2022. “If you go to a [crypto] conference, it’s just filled with weird, weird people.”

Pacific thanked a16z crypto and Guy Wuollet for their guidance throughout the wind-down process.

“I’ve never once given up in my career. The only thing I’ve ever quit was college, so this makes the second thing,” Pacific wrote. “It’s challenging, but I find peace in the fact that a career is a practice: the goal is not the destination, but the journey of innovation.”

Entropy’s closure adds to a broader trend of crypto startup shutdowns in 2025. Crypto venture deal count fell roughly 60% year over year in 2025, dropping to about 1,200 transactions from more than 2,900 in 2024, according to The Block Pro data.

Looking ahead, Pacific said they plan to take a break before potentially pivoting away from crypto entirely. “My time in crypto might be coming to an end, as I feel myself drawn specifically into pharmaceuticals: I want to innovate on hormone delivery, specifically for women who experience menopause and trans women for HRT,” Pacific wrote, adding they will be spending time validating research on new estradiol drug formulations.

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