Crypto Custody Startup Entropy to Shut Down After Failed Pivots

Entropy, a cryptocurrency custody startup backed by Andreessen Horowitz and Coinbase Ventures, is winding down operations after failing to achieve sufficient scale. The company will return $25-$27 million to investors, marking the end of a four-year journey that included multiple pivots and two rounds of layoffs.

Founded as a decentralized custody solution for institutional crypto holders, Entropy later shifted focus to building automation tools for crypto workflows. CEO Tux Pacific announced the closure via social media, stating the business couldn't reach the size required by venture backers despite testing various product directions.

The shutdown reflects ongoing challenges for crypto infrastructure startups in finding sustainable business models amid fluctuating market conditions. Entropy's decision to return capital rather than pursue further pivots demonstrates heightened accountability in crypto venture investing following the 2022 market downturn.