Farcaster Founders to Return $180 Million to Investors Following Protocol Sale

Farcaster team to return $180M to investors after protocol sale, says co-founder Dan Romero.

The Farcaster team intends to return the entire $180 million raised from venture investors, according to Dan Romero, co-founder of the DeSoc project.

Given some rumors, wanted to post a few clarifications:

Farcaster is not shutting down. The protocol works and will continue to work. There were 250,000 MAU in December and over 100,000 funded wallets. The acquirer, Neynar, is a venture-backed startup and plans to shift…

— Dan Romero (@dwr) January 22, 2026

The developer company Merkle Manufactory raised $30 million from venture firm a16z crypto in 2022. This was followed by another funding round led by Paradigm, which valued the firm at over $1 billion.

According to Romero, Merkle has raised a total of $180 million over its existence.

He described the decision to sell the Farcaster protocol and return funds to investors as the culmination of “five years of development and a commitment to responsibly managing capital.”

Project management has been transferred to Neynar, an infrastructure provider in the decentralized social networks sector. The new team plans to shift focus towards developer support.

“Farcaster is not shutting down. The protocol works and will continue to work. In December, the platform had 250,000 monthly active users and over 100,000 funded wallets,” wrote Romero.

Some investors have already confirmed the return of funds, including early supporter and former Coinbase executive Balaji Srinivasan.

As a Farcaster investor, can confirm: money is coming back to investors.

Dan and the team built something genuinely amazing, perhaps the best decentralized social protocol. He’s independently wealthy from Coinbase, and could have done whatever he wanted, but he decided to spend… https://t.co/ondjUSutKL

— Balaji (@balajis) January 22, 2026

“Developing protocols sometimes takes longer than the lifespan of a single company. Transferring management to Neynar could help Farcaster become a truly decentralized social protocol. The technology is real and it works. It just needs a ‘killer’ app. The project definitely deserves further development,” he commented.

Accusations

Following the announcement of Farcaster’s sale, Injective developer known as Mirza accused Romero of fraud.

https://t.co/oJWpcZNYUD

— Mirza 🥷 (@mirza) January 22, 2026

He claimed that the project’s co-founder never intended to launch a viable product. Instead, he allegedly built a “vague and non-functional” project, focusing solely on raising money.

Romero purportedly used media presence and connections at Coinbase to create artificial hype.

The developer believes the funding round led by Paradigm occurred only due to Romero’s friendship with the fund’s managing partner, Fred Ehrsam, with whom he studied.

“In 2024, Dan did the impossible: convinced Paradigm to lead a $150 million funding round, valuing Farcaster at approximately $2.5 billion. At that time, according to data, Farcaster had about 80,000 daily active users at its peak,” noted Mirza.

He claimed that after raising funds, Romero withdrew $15 million in “secondary liquidity” for personal gain, now disguising the failure as a “successful exit.”

The community reacted skeptically to the user’s accusations. Many sided with the Farcaster co-founder, pointing out inaccuracies in Mirza’s text.

“Don’t be envious — the guy just had the right connections and the ability to attract investment. The Farcaster team was quite small. There are hundreds of Web2 project founders who exited with much larger sums and much earlier, limiting their involvement to monthly board meetings,” noted a user under the pseudonym Nate.

Earlier in January, Romero announced a strategic shift for Farcaster towards wallet development. He explained the decision as a result of the failure of a social network-focused strategy.