After multiple shutdowns and layoffs in late 2025, including DappRadar’s closure, some crypto firms have announced the winding down of their operations due to a lack of scalability in 2026. Entropy, a decentralized crypto custody startup, is in the spotlight after it announced that it will shut down its operations.
“After four years, several pivots, and two rounds of layoffs, I’ve decided to wind up Entropy and return capital to our investors”, said Entropy Founder Tux Pacific in an X post.
Notably, the firm is not fleeing with investor funds. Instead, it has planned to return the funds, as the founder stated.
Entropy’s shutdown due to lack of growth
In the second half of 2025, Entropy, backed by a16z venture capital firm, was building Zapier or n8n, a tool for users to automate crypto activities such as transactions, managing wallets, smart contract execution, and enhancing workflows. The team was also working on Trusted Execution Environments (TEEs) to operate sensitive data in cases where the surrounding ecosystem gets compromised.
Entropy’s ambitions to develop its platform did not meet a joyful end, as it realized that the “business model was not venture scale.” In other words, the business model for the products mentioned above lacked the growth potential that venture capital firms really look for.
The platform collected initial feedback, and that’s how it found out the limited growth potential for the firm’s products.
Entropy executive to move from blockchain to pharmaceuticals
Pointing to the firm’s closure, Tux Pacific said: “The only thing I’ve ever quit was college, so this makes the second thing.” Although Pacific added that the current circumstances are challenging, he noted that there is peace in understanding that “a career is a practice.”
The founder’s X post extended to praise team members, including a software engineer, a product marketer, and a product designer. Tux Pacific clearly stated in the post that they would dive into bringing innovation in pharmaceuticals as they leave crypto.
Crypto firms see greater layoffs
Recently, Nifty Gateway, an NFT marketplace backed by the Gemini crypto firm, announced it would close down its operation on February 23, 2026. This stems from the platform’s difficulties in sustaining a following after a downturn in the NFT industry.
After the collapse of Sam-Bankman Fried’s FTX exchange in 2022, several firms closed their operations, including BlockFi, Voyager, and Celsius. Most of these firms ceased their operations due to bankruptcy.
The market downturn in 2025 has also allegedly resulted in multiple layoffs, such as at the Ethereum Layer-2 network Polygon, Gemini crypto exchange, Coinbase, and more.
