Decentralized custody startup Entropy, which garnered significant attention in the crypto world when it successfully Capital $25 million in a seed round led by Andreessen Horowitz (a16z) in 2022, has officially announced its closure and the return of all Capital to investors. This information was publicly confirmed on social media by the founder and CEO of Tux Pacific, bringing to an end a nearly four-year journey building one of the most ambitious security infrastructure projects in the post DeFi boom cryptocurrency market.
Chia to Pacific, the decision to cease operations was made after a long period of testing the business model, undergoing several strategic shifts and two rounds of staff reductions. In its final stages, Entropy was developing a dedicated crypto automation platform, described as the “Zapier or n8n blockchain version,” enabling organizations and users to enhance their on-chain operational workflows. This product integrated automated transaction signing mechanisms using threshold cryptography, leveraged a trusted execution environment (TEE) to increase security, and incorporated AI to simplify the management of digital assets and complex operational processes.
However, after conducting surveys and gathering initial feedback from the market, the Entropy team realized that this business model was unlikely to scale sufficiently to meet the expectations of a venture-backed Capital . Pacific stated that they faced a choice: either continue exploring new innovative directions or pivot once again. After years of dedicated work in crypto, they concluded that they had done their best for the project, and stopping at this point was the most sensible decision.
Entropy raised $25 million in a seed Capital round in June 2022, with participation from several large and reputable funds in the industry such as Dragonfly Capital, Variant, Ethereal Ventures, Coinbase Ventures, Robot Ventures, Inflection, and Komerabi Fund. Prior to that, the company also raised $1.95 million in a pre-seed round in early 2022, bringing the total Capital received to approximately $27 million. At a time when the market was booming, Entropy was considered one of the projects with the most distinctive approach in the digital asset custody sector.
Tux Pacific founded Entropy in 2021, after previously working at NuCypher and self-studying Cryptology. Pacific himself is a unique figure in the tech startup world, openly admitting to being a college dropout, a strong supporter of transgender rights, and self-describing himself as an "anti-capitalist anarchist," while still believing in the free market principles established in the early days of Bitcoin. This combination of unconventional thinking and deep technical expertise has made Entropy highly noticeable since its launch.
Initially, Entropy was positioned as a decentralized alternative to large centralized custody platforms like Fireblocks or Coinbase Custody. The project applied cryptographic techniques based on Multi-Party Computation, allowing users to send and manage crypto assets across multiple blockchains, while also setting their own rules for interacting with assets, such as time limits or Transaction Triggers conditions. This approach was expected to reduce reliance on centralized intermediaries, a topic of particular concern to the crypto community given the series of exchange and custody failures in previous years.
Despite its anti-capitalist ideology, Pacific has acknowledged that crypto is a rare environment where differences are widely accepted. In a 2022 exchange, they stated that blockchain conferences are always filled with "quirky people in a positive way," and that this diversity is what makes the industry so appealing. When announcing the closure of Entropy, Pacific also thanked the a16z crypto team and Guy Wuollet personally for their support and advice throughout the process of ceasing operations and returning Capital to investors.
