Story Protocol co-founder Jason Zhao announced his departure from the project on August 16, 2025, stepping down from his full-time role while transitioning to a strategic advisor position. This move ignited fierce backlash across the crypto community, with traders and developers accusing Zhao of orchestrating a 'soft rug pull' after raising over $130 million from elite investors including Andreessen Horowitz (a16z), Polychain Capital, and Samsung Next.
Critics highlighted the stark disconnect between Story Protocol's $2.25 billion valuation and its minimal revenue, which totaled just $45 in fees over 24 hours at the time of the announcement and an all-time high of only $3,163. Prominent developer Kingjami lambasted the project, noting its failure to deliver utility despite ambitions to tokenize $61 trillion in intellectual property (IP). Joseph Schiarizzi, founder of Nerite, further alleged market manipulation, revealing that a $150,000 token sale by the team moved IP's price by merely 2%.
Tokenomics reveal Zhao and three other co-founders control 20% of the 1 billion IP token supply. At current prices near $5.58, Zhao's potential 5% stake could yield profits of $281 million if liquidated. The IP token has plummeted 15% weekly and 22.35% monthly, with an additional 4.7% drop post-announcement. Trading volume collapsed over 75%, signaling eroded confidence.
Zhao attributed his exit to refocusing on AI and robotics through Poseidon, an offshoot project, calling Story Protocol his 'most meaningful experience'. Leadership transitions to S.Y. Lee and Andrea, formerly of Amazon AI, but community skepticism persists amid accusations of abandoned accountability.