AI16Z and ELIZAOS creator hit with federal class action alleging misleading promotion and market manipulation

ChainThink says crypto-focused law firm Burwick Law has filed a federal class action in the U.S. District Court for the Southern District of New York (SDNY) against Walters, the creator of AI16Z and ELIZAOS, along with other defendants. The case (No. 1:26cv03238) alleges violations of consumer protection laws, false advertising, and unjust enrichment. According to the complaint, the defendants leveraged the credibility of prominent Silicon Valley venture capital firm Andreessen Horowitz (a16z) to market the project, portraying it as an AI technology startup. Court filings state that an AI16Z token was launched on the Solana blockchain on Oct. 24 and later rebranded as ELIZAOS. The project promoted AI agents running autonomous investment funds, but the lawsuit claims operations were manually controlled and that the project generated no revenue during the period at issue. The token’s price reportedly peaked around $2.47 on Jan. 2, pushing market capitalization above $2.6 billion, before falling sharply amid sell-offs by large holders. On-chain data cited in the report indicates top-performing traders booked roughly $39 million in profits. The filings also allege that during the migration to ELIZAOS, total supply was increased tenfold and 40% of the newly issued tokens were allocated to insiders. In South Korea, exchanges that are members of DAXA have placed the token on a "Trading Warning" list, and Coinbase has suspended trading in its perpetual contracts.