Gate News message, April 22 — Burwick Law filed a federal class-action lawsuit on April 21 against the creators of AI16Z and ELIZAOS, alleging that the projects perpetrated a $2.6 billion fraud in the crypto market through fake AI claims and deceptive marketing practices. The complaint, filed in the U.S. District Court for the Southern District of New York (Case 1:26-cv-03238), accuses the defendants of presenting a manufactured association with venture capital firm Andreessen Horowitz and operating a manual system disguised as autonomous AI technology.
AI16Z launched on the Solana blockchain on October 24, 2024, and reached a peak valuation of $2.6 billion by January 2025. The lawsuit alleges that large token holders orchestrated coordinated sell-offs at the peak, with one wallet realizing $39 million in profit while retail investors suffered losses. The token subsequently crashed 99.9%, trading at $0.00055 at press time. According to the complaint, at least 3,945 wallet addresses incurred losses during the collapse. Andreessen Horowitz later demanded the project cease using the a16z name; the defendants responded by rebranding to ELIZAOS and conducting a token migration in which approximately 40% of the new allocation was directed to undisclosed insiders and team members.
The lawsuit alleges violations of U.S. consumer protection laws, including deceptive practices and false advertising statutes in New York and California. Plaintiffs seek damages and equitable relief for investors who purchased tokens between October 24, 2024, and the filing date. Regulatory bodies have also responded: South Korean exchanges flagged the token with a trading warning, and a major CEX suspended perpetual contract trading linked to the project.
Disclaimer: The information on this page may come from third parties and does not represent the views or opinions of Gate. The content displayed on this page is for reference only and does not constitute any financial, investment, or legal advice. Gate does not guarantee the accuracy or completeness of the information and shall not be liable for any losses arising from the use of this information. Virtual asset investments carry high risks and are subject to significant price volatility. You may lose all of your invested principal. Please fully understand the relevant risks and make prudent decisions based on your own financial situation and risk tolerance. For details, please refer to
Disclaimer.
Related Articles
Believe founder Benjamin Pasternak arrested on suspicion of second-degree strangulation
According to publicly available records from the New York Criminal Court on April 23, Solana ecosystem application Believe founder Benjamin Pasternak was arrested in New York on April 22. He is charged with one second-degree strangulation count and two counts of assault with intent to cause bodily injury. The case is scheduled to be heard at the New York Criminal Court on June 11. Pasternak has pleaded not guilty to all of the charges mentioned above.
MarketWhisper12m ago
New York Governor Hochul signs an executive order restricting state government employees from “insider trading in prediction markets”
New York Governor Kathy Hochul signed an executive order on Wednesday, April 22, barring state officials and employees from using nonpublic information obtained through their positions to place bets in prediction markets, or from assisting any third party in engaging in the foregoing conduct. On the same day, prediction market platform Kalshi announced that it had completed an internal investigation into three political candidates who placed bets in their own campaign activities, and imposed fines and suspensions on them.
MarketWhisper19m ago
South Korean Finance Employee Sentenced to 3 Years for Embezzling 570M Won to Invest in Crypto
Gate News message, April 23 — A finance employee in his 20s at a South Korean company was sentenced to three years in prison by Busan District Court for embezzling corporate funds to invest in cryptocurrency, according to Korean media Newsis. Between 2021 and 2025, the employee transferred company f
GateNews1h ago
Former FTX CEO SBF withdraws motion to rehear in New York court, saying he can’t get a fair hearing
FTX former CEO Sam Bankman-Fried (SBF) on Wednesday, April 22, filed a written letter with the U.S. District Court for the Southern District of New York, withdrawing a motion for a new trial under Rule 33 of the Federal Rules of Criminal Procedure, saying that he could not obtain a fair hearing before the presiding judge, Lewis Kaplan.
MarketWhisper1h ago
Kalshi: Three candidates illegally bet on their own campaigns, fined and barred for five years
According to a report by The New York Times on April 23, Kalshi, a prediction market platform, issued disciplinary actions to three political candidates who attempted to bet on their own election campaigns, and the relevant disciplinary action letters have been posted on Kalshi’s website. Bobby Deno, head of enforcement and legal counsel at Kalshi, said the sanctions are part of the platform’s “proactive engineering solution,” designed to identify trading activity that violates the platform’s recently updated rules.
MarketWhisper2h ago
Believe Founder Benjamin Pasternak Arrested on Second-Degree Murder and Assault Charges
Gate News message, April 23 — According to New York Criminal Court public records, Benjamin Pasternak, founder of Believe, was arrested on charges of second-degree murder and assault, with a court appearance scheduled for June 11, 2026.
Pasternak was previously accused of involvement in a token
GateNews2h ago
