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.
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