Entropy, a decentralized crypto custodian backed by a $25 million seed from a16z in 2022, is shutting down after several pivots and two rounds of layoffs.

Pacific says the business model isn’t venture-scalable and has decided to cease operations, with capital to be returned to investors.

This closure comes amid a broader trend of crypto startups returning capital or winding down, including a16z-backed Farcaster’s sizable capital return amid its takeover.

The shutdown highlights human consequences for employees and users, guidance for migrations, and the broader takeaway that infrastructure startups can offer valuable learnings even when they close.

Observers view the shutdown as a sign of challenges in strategy and a lean workforce, pointing to possible financial or product-market-fit difficulties.

Analysts note patterns in crypto infrastructure failures: regulatory uncertainty, security needs, slower institutional adoption, bear market pressure on runway, and the need for sustainable business models.

Cointelegraph reiterates its commitment to independent journalism and encourages readers to verify information independently.

Details on the exact shutdown date, remaining assets, or plans for investors or staff have not been disclosed.

Pacific is considering shifting beyond crypto toward pharmaceuticals research, including hormone delivery and estradiol formulations, signaling a potential pivot away from crypto.

The broader crypto funding downturn contextualizes this pivot, with Pacific exploring opportunities in pharmaceuticals as a future path.

Looking ahead, Pacific plans to pause and possibly pivot entirely from crypto, pursuing pharmaceutical research focused on menopause and hormone replacement therapy.

The piece places Entropy within ongoing startup pivots and layoffs, underscoring volatility in crypto custody and related fintech ventures.