They Named It After a Top VC Firm. Now Investors Say It Was Crypto Fraud.

A proposed class action lawsuit filed in federal court accuses the founders of a cryptocurrency project of engineering a fraud that wiped out hundreds of millions of dollars in investor value over more than a year.

Plaintiff Gorka Pikabea, a resident of Spain, filed the case April 20, 2026, in the U.S. District Court for the Southern District of New York. The lawsuit names Eliza Labs Inc., Shaw Walters (founder of Eliza Labs), Sebastian Quinn-Watson and AI16Z DAO as defendants, along with 50 unnamed parties referred to as Does 1 through 50.

The case is brought on behalf of everyone who purchased $AI16Z tokens, later migrated to a new token called $ELIZAOS, between Oct. 24, 2024, and the date the complaint was filed. The complaint identifies at least 3,945 wallet addresses that sustained losses during that period. The lawsuit seeks actual damages, treble damages, restitution, disgorgement of profits, injunctive relief and attorney's fees.

Walters launched the $AI16Z token on the Solana blockchain on Oct. 24, 2024, through a platform called DAOs.fun, raising approximately $75,000 at launch. According to the complaint, that modest beginning grew into one of the most dramatic rises and falls in recent cryptocurrency history.

Borrowed credibility

The complaint alleges the project's name was not chosen by accident. According to the lawsuit, defendants named the project "ai16z" to mimic "a16z," the widely recognized abbreviation for Andreessen Horowitz, one of Silicon Valley's most prestigious venture capital firms. The AI agent at the heart of the project was branded "Marc AIndreessen," a play on the name of Andreessen Horowitz co-founder Marc Andreessen, used without his or the firm's authorization, the complaint states.

Within days of launch, Marc Andreessen acknowledged the project in a post on X (formerly Twitter). The complaint alleges that single acknowledgment caused the token's market capitalization to surge to $80 million, demonstrating how tightly the project had wound itself to the real Andreessen Horowitz brand.

Defendants also worked to construct what the complaint describes as a comprehensive facade of legitimacy. According to the lawsuit, they built a professional website at elizaos.ai, a documentation portal and GitHub repositories showing hundreds of contributors. The project also claimed partnerships with Stanford University, blockchain data provider Chainlink and other entities, all designed, the complaint alleges, to make the project appear indistinguishable from a real technology company.

The complaint alleges the AI underpinning the project was not what it seemed. On Oct. 30, 2024, cryptocurrency news outlet Protos reported that the AI agent, which was marketed as autonomously managing an investment fund, was actually operated by humans. The open-source ElizaOS framework that formed the project's technical foundation generated no licensing fees, subscription revenue or any commercial returns during the class period, according to the complaint.

In December 2024, defendants announced a paid partnership with Stanford University's Future of Digital Currency Initiative. Rather than earning that affiliation on merit, the complaint alleges defendants contributed more than $250,000 to secure the association, using it to bolster the project's credibility with investors.

Alleged insider trading, broken promises and a market collapse

In November 2024, the complaint alleges, Walters made a public statement on X that the ai16z project would not create a new coin. According to the lawsuit, that statement was false at the time it was made and Walters was simultaneously working, for at least two weeks, on a separate Eliza-branded token.

On Nov. 19, 2024, a new $ELIZA token appeared and surged past an $80 million market capitalization within one hour. Meanwhile, the original $eliza token crashed approximately 87%, devastating holders, according to the complaint. The lawsuit also cites on-chain data it says showed a wallet linked to an ai16z managing partner known as "Logan" sold holdings immediately before Walters made his public announcement, which the complaint characterizes as evidence of insider trading.

Despite the November turbulence, the project continued to attract attention. Walters embarked on a promotional tour through Shanghai, Beijing and Hong Kong. During the tour, he announced plans for a Layer 1 blockchain, a type of foundational blockchain infrastructure, along with revenue-generating products featuring token buyback mechanisms.

The announcements caused the token to surge 37%, pushing its market capitalization to $1.9 billion, according to the complaint.

The token reached its all-time high of approximately $2.47 on Jan. 2, 2025, when its total market capitalization exceeded $2.6 billion. The very next day, the complaint alleges, large holders began liquidating millions of dollars worth of tokens. By Jan. 11, 2025, the most profitable single trader had realized $39 million in profit. The token fell 39% within eight days of its peak.

On Jan. 28, 2025, Chris Dixon of a16z Crypto publicly revealed on the Unchained podcast that Andreessen Horowitz had demanded the project change its name. Dixon stated the firm "was not connected with AI16z" and that the name had been "creating a little bit of confusion."

Walters announced a rebrand to ElizaOS shortly after. By March 2025, the token had fallen 92% from its peak.

Token migration and supply dilution

The collapse did not mark the end of what the complaint characterizes as harmful conduct. Between October and November 2025, defendants executed a migration from the $AI16Z token to a new token, $ELIZAOS. The move expanded the total token supply tenfold, from 1.1 billion tokens to 11 billion.

Of that expanded supply, only 60% went to existing holders. The remaining 40% was allocated to insiders: 15% to undisclosed private investors, 10% to team members and contributors, and the remainder to entities controlled by the defendants.

The complaint alleges this arrangement effectively diluted existing token holders by 40% with no prior public disclosure, transferring value away from retail investors and toward insiders.

The migration triggered immediate market consequences. Korean exchanges that are members of the Digital Asset eXchange Alliance (DAXA) listed the token as a "trading warning" coin. Coinbase suspended perpetual contract trading for the token.

What this means for investors

The complaint asserts six legal claims against the defendants. Two arise under New York's General Business Law: one covering deceptive business practices and a second covering false advertising. Two additional claims are filed under California's Unfair Competition Law and False Advertising Law. The complaint also includes claims for negligent misrepresentation and unjust enrichment.

Beyond compensatory damages, the plaintiff seeks statutory damages, treble damages (three times the actual loss), restitution and disgorgement of profits. The complaint also requests the creation of a constructive trust over digital assets obtained by the defendants, injunctive relief to halt any further alleged deceptive practices and attorney's fees.