Story Protocol (IP) co-founder leaves project, promises to remain on as ‘strategic advisor’
Traders accuse Story Protocol co-founder Jason Zhao of walking away with $281 million after announcing his departure from the company’s core team, sparking backlash from the community.
- Story co-founder Jason Zhao announces that he is leaving the project to focus on AI and robotics.
- The move sparked community backlash from traders who accuse the co-founder of rug-pulling the $2.2 billion project.
On August 16, Story founder Jason Zhao announced that he will be stepping down from his role as a co-founder and staying on as a strategic advisor for the protocol. This move sparked a wave of negative comments from the crypto community who believe he is walking away with the bag.
Prominent blogger and co-owner of the Bankless podcast David Hoffman responded with shock, simply writing “Bro what” under Zhao’s departure post.
Founder led rug-pulls are a recurring story in crypto, but rarely do they happen after capital commitments from the likes of well-respected venture-capital firms like a16z.
Though it remains to be seen how this will affect the team’s core product and development, several commenters on Zhao’s post have harkened this to a founder led-exit, prompting many online to accuse him of rug-pulling the project.
According to the original whitepaper, Zhao and the other three co-founders hold 20% of the total 1 billion token supply or around 250 million tokens. At current prices, if Zhao holds 5% of the tokens and does sell his holdings he could potentially make a profit of around $281 million.
Not only that, historically Story Protocol has secured approximately $134.3 million in equity funding. These rounds include a Seed round in May 2023 that raised $29.3 million, a Series A in September 2023 bringing in $25 million, and a large Series B in August 2024 led by Andreessen Horowitz or a16z crypto that contributed $80 million. This values the company at around $2.25 billion.
Additional influential investors the joined the funding round for Story Protocol include Polychain Capital, Samsung Next, Hashed, Mirana Ventures, Alliance DAO, and prominent figures like Cozomo de’ Medici and Balaji Srinivasan.
Story Protocol also secured an $82 million token-based investment from Heritage Distilling, a publicly traded company, as part of a strategic initiative to establish an IP token treasury within a broader $360 million IP token reserve strategy.
One X trader posted a SpongeBob meme, calling Zhao’s exit as “another shameless VC softrug.” When another trader defended Zhao’s decision, the X trader retaliated by saying that the protocol co-founder should “consider posting even one single good trade before trying to drum up exit liquidity.”
“Story just got started and you are stepping out?” asked one trader.
“Curious how much money you pocketed,” said another X user.
Why is Jason Zhao leaving Story Protocol?
One of the original builders of the project, Jason Zhao said that his departure stems from his involvement in Poseidon, a full-stack data infrastructure layer created by the protocol to solve AI’s long-tail data bottleneck.
“I rekindled my original passion from my DeepMind days: applying AI to frontier industries like science and space. It’s time for me to fully pursue this path,” said Zhao in his post.
He explained that humanity is reaching a “crucial inflection point” that he likened to a new industrial revolution, which is building upon web3 technology and the deployment of artificial intelligence in various field including robotics, biopharma, space exploration and more.
“Looking back, building Story (IP) has been the most meaningful experience of my life. What began as a whiteboard sketch when I was 22 turned into more than I could have imagined,” said Zhao, adding that the Story IP has become the backbone protocol for IPs like fashion brand Balmain and K-pop group BTS in South Korea.
He also used the opportunity to announce the new leadership that will be taking over the helm. According to Zhao, Story is set to embark on a second phase led by S.Y Lee and a new CPO Andrea, who previously worked on Amazon’s conversational AI.
Story’s IP price analysis
According to data from crypto.news, Story’s native token IP has fallen by more than 15% in the past week and 22.35% in the past month. Zhao’s exit announcement has led to the token falling even deeper by 4.7%,
At press time, the token is trading hands at $5.58 in the past 24 hours with a market cap that has fallen by 3.39% to $1.7 million. Since its launch in February 2025, IP has shown extreme volatility; surging from an all-time low of $1 to highs above $7.3 within weeks after its launch. Just today, the token has managed to flirt with the $7 threshold before falling lower to around the $5.55 range.
Though lately, the token has been in a slump that’s been pushed lower due to Zhao’s departure from his leadership role in Story. Not only that, the trading volume for IP has fallen by more than 75%, indicating a significant decrease in market activity.
