This article was first published on TurkishNY Radio.
The Entropy shutdown has marked the end of a decentralized crypto custody startup once backed by major venture investors. The founder and chief executive of Tux Pacific confirmed the decision over the weekend.
The company plans to return the remaining capital to investors. The move follows years of pivots and a tough funding environment for crypto startups.
Pacific said the Entropy shutdown came after four years of development. The company went through several strategy changes. It also carried out two rounds of layoffs.
Scaling Challenges Drive Orderly Wind-Down
Leadership decided that further pivots would not deliver venture-scale growth. The focus shifted to an orderly wind-down and capital return.
Entropy launched with the promise of reshaping crypto custody. It aimed to reduce reliance on centralized providers.
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Despite early momentum and strong backing, the Entropy shutdown shows how difficult scaling has become. Market conditions and investor expectations played a key role.
Founder Confirms the Decision
Pacific announced the Entropy shutdown in a public post. The founder said feedback showed the business model was not venture-scale. That left limited options. Leadership chose closure over another pivot. The goal was to protect investor capital.
Late Pivot to Automation Fails
In 2025, Entropy pushed into crypto automation tools. The platform aimed to automate signing and workflows. It used advanced security methods and AI features. The pivot did not gain enough traction. The Entropy shutdown followed soon after.
Entropy drew attention in 2022 after raising $25 million in a seed round. The round was led by Andreessen Horowitz through its a16z crypto arm.
Other investors joined. An earlier pre-seed round raised $1.95 million. Even with support, the Entropy shutdown could not be avoided.
Original Custody Vision
At launch, Entropy promoted a decentralized custody model. It relied on cryptographic tools to give users control. Funds could move under set rules.
This approach aimed to rival centralized providers. The Entropy shutdown brings that vision to a close.
Funding Climate Adds Pressure
The Entropy shutdown comes during a sharp downturn in crypto venture funding. Deal counts fell by about 60% year over year in 2025.
Transactions dropped to around 1,200 from more than 2,900 the year before. Data from The Block Pro highlights the slowdown. Startups now face stricter growth demands.
Pacific thanked a16z crypto and Guy Wuollet for guidance. Their support helped manage the Entropy shutdown. Investor cooperation can ease closures. It also protects remaining value during exits.
Founder Looks Beyond Crypto
After the Entropy shutdown, Pacific plans to step back. The founder may pivot away from crypto. Interest has shifted toward pharmaceuticals.
The focus is on hormone delivery research. Pacific previously told TechCrunch that crypto offered space for unconventional thinkers. That chapter may now be closing.
The Entropy shutdown adds to a wider pattern in 2025. Several crypto startups have shut down. Funding is tighter. Expectations are higher. Many early-stage firms are reassessing paths to scale.
Conclusion
The Entropy shutdown reflects the changing reality of crypto startups. Strong funding and bold ideas no longer guarantee survival. Market discipline has increased. For founders, timing and scale matter more than ever. Entropy’s exit shows how quickly conditions can shift.
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Appendix: Glossary of Key Terms
Non-custodial: A custody structure where assets are maintained by users instead of a centralized middleman.
Ventricular-growth: Company striving for growth at a scale sufficient to satisfy venture-capital return requirements.
Over-the-counter trade (OTC): It involves the buying or selling of stocks directly between the buyer and the seller without involving stock exchanges.
Crypto venture funding: The money that goes to early-stage blockchain companies.
Threshold Cryptography: A technique that distributes signing authority among multiple constituents.
Trusted execution environment (TEE): A secure enclave within a hardware for sensitive computations.
Frequently Asked Questions About Entropy Shutdown
1- Why did the Entropy shutdown occur?
The Entropy shutdown happened after leaders concluded the model could not scale for venture returns.
2- Will investors get money back?
Yes. The company said remaining capital will be returned after the Entropy shutdown.
3- What products did Entropy build?
Entropy worked on decentralized custody tools. It later pivoted to crypto automation before the Entropy shutdown.
4- How does this affect the crypto market?
The Entropy shutdown highlights pressure on early-stage startups during a funding downturn.
