Ai16z DAO’s Surprise $ELIZA Token Launch Faces Backlash, Scams Add to Turmoil

In a surprise move, Ai16z DAO launched its $ELIZA meme coin today via Pump.fun, reaching a market cap of $80 million within an hour. The launch overshadowed a community-led $ELIZA token that debuted just four days earlier on Vvaifu, a platform for launching tokens for AI agents.

Launched on DAOS.fun, ai16z DAO is an AI meme coin trading fund trained on Marc Andreessen's writings and trading habits. Creatively dubbed ‘Marc AIndreessen’, or ‘AI Marc’, the AI agent aims to outperform his organic counterpart.

Price chart of the first Eliza 

The sudden announcement of the new token caused the original $ELIZA to lose 50% of its value, leaving early investors frustrated.  

This turn of events followed public assurances from Ai16z just a week ago that they had no plans to launch a token and welcomed community efforts instead, raising concerns about transparency and consistency in their messaging.  

Founder Promises Airdrop Amid Controversy

In response to the backlash, Ai16z's founder explained that today's launch was a last-minute decision driven by a need to align with internal development milestones. Shaw, a partner at ai16z DAO, stated that they intend to separate the intellectual property of the Eliza AI agent from ai16z DAO to allow her to pursue her mission to achieve artificial general intelligence (AGI) independently. Additionally, Shaw mentioned in a Twitter Spaces discussion that they did not launch the token but assisted a talented development team in bringing it to market.

To mitigate the impact on the first $ELIZA holders, the team pledged to airdrop 10% of the new token's supply. However, the lack of prior communication left many in the community feeling blindsided. Many people took to social media, particularly X, to express their frustration about the issue.

"If you want to tell me that I am a bad person and I created an open-source project for the character, set up a team, and plan to give this character away for free to the world and for (Eliza) to be her own person, and then you are mad because your bags went down—like, who are you?" Shaw said in a Twitter Space, showing a lack of empathy and rubbing salt in the community's wounds, particularly for those who lost a lot of money because of the launch.

Compounding the chaos, a wallet associated with an Ai16z managing partner was discovered to have sold substantial amounts of the original $ELIZA just prior to the launch of the new token, leading to allegations of insider trading.

Scammer Exploits Chaos

The launch also opened the door to opportunistic scams. A fraudster hijacked the DEXScreener links for the new $ELIZA token, redirecting users to fake tokens.

Over four hours, two counterfeit coins were launched, misleading traders and causing financial losses. The links have since been corrected.  

Trader Sees Massive Gains  

Not everyone faced losses. One trader or an insider turned a $1.9K investment into $3.67M within two hours, achieving a 1,925x return by strategically trading $ELIZA during its launch frenzy.  

While Ai16z's founder expressed regret over the confusion, they defended the decision to proceed with the token, citing years of planning and a need to move forward. Developers from the original $ELIZA project have been invited to join the team, aiming to unify the community and chart a cohesive path for the project.  

In a recent development in the story, Justin Sun, the founder of the Tron blockchain and HTX exchange, has announced listing the first Eliza on the exchange to support the community.