Crypto Custody Startup Entropy Shuts Down, Returns Capital After $27M Raised

• Entropy is shutting down after four years and returning capital to investors because its latest product, a crypto automation platform, failed to meet venture scaling expectations.
• The startup raised roughly US$27 million in funding from high-profile backers like a16z and Coinbase Ventures but ultimately decided to close rather than attempt another pivot.
• Founder Tux Pacific is stepping away from the crypto industry to potentially explore pharmaceutical research following a significant 60% decline in crypto venture deals during 2025.

Entropy, a decentralised custody startup backed by Andreessen Horowitz, is shutting down and returning remaining capital to investors, founder and CEO Tux Pacific said on X.

Pacific said the company is closing after four years of work that included multiple pivots and two rounds of layoffs. 

Notably, Entropy’s most recent product was a crypto automation platform, something similar to what users do with platforms like n8n or Zapier for on-chain workflows, with automated transaction signing using threshold cryptography, secure execution using trusted execution environments (TEEs), and AI integrations.

But Pacific said feedback showed the business would not scale to venture expectations, leaving another pivot or a shutdown.

I was left with the choice to find a creative way forward or pivot once more. 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.

Tux Pacific, Entropy Founder.

Related: UBS CEO: Blockchain’s Takeover of Traditional Banking Is Inevitable

Entropy Shuts Down After Raising $25M

Entropy raised a US$25 million (AU$38.25 million) seed round in June 2022, led by a16z crypto, with participation from Dragonfly Capital, Coinbase Ventures, Robot Ventures, Inflection and other high-profile VCs. 

It had raised a US$1.95 million (AU$2.98 million) pre-seed in January 2022, bringing total funding to roughly US$27 million (AU$41.31 million).

Before pivoting to AI and automation, the company was initially marketed as a decentralised alternative to custodians such as Fireblocks and Coinbase, so the original pitch relied on multi-party computation and related cryptographic methods to let users manage funds across blockchains while setting rules on how assets could move, including time-based constraints.

The shutdown comes during a weaker crypto venture cycle. Crypto venture deal count fell about 60% in 2025 to roughly 1,200 transactions from more than 2,900 in 2024.

Read more: Bitcoin Whipsaws Higher After Trump Signals Greenland Deal, Drops EU Tariff Threat

The post Crypto Custody Startup Entropy Shuts Down, Returns Capital After $27M Raised appeared first on Crypto News Australia.