Traders accused Story Protocol co-founder Jason Zhao of walking for $281 million after announcing his departure from the company's core team, causing a backlash from the community.
summary
- Story co-founder Jason Zhao has announced that he will be leaving the project to focus on AI and Robotics.
- The move sparked a community backlash from traders accusing the co-founder of ragpaling the $2.2 billion project.
On August 16th, Story founder Jason Zhao announced that he would step down from his role as co-founder and remain as a strategic advisor to the protocol. The move sparked a wave of negative comments from the crypto community, whom he believes he is walking with his bag.
Bankless Podcast's prominent blogger and co-owner David Hoffman responded with shock, only writing “Bro What” under Zhao's departure post.
Founder's LED lag pull is a recurring story of Crypto, but they rarely happen after capital commitments like the A16Z.
It is still unclear how this will affect the team's core products and development, but some commenters on Zhao's posts have urged this to be obsessed with the founder's LED-Exit, urging them to accuse many of them of laying projects online.
According to the original white paper, Zhao and three other co-founders hold a total supply of 1 billion tokens or 20% of about 250 million tokens. At current prices, Zhao could potentially make a profit of around $281 million if he owns 5% of the token and sells his holdings.
Not only that, but historically, Story Protocol has secured approximately $134.3 million in equity funding. These rounds included a seed round that raised $29.3 million in May 2023, a Series A that raised $25 million in September 2023, and a massive Series B that led by Andreessen Horowitz or A16Z Crypto in August 2024. This values the company at approximately $2.25 billion.
Additional influential investors participated in the Story Protocol funding round. It includes notable figures such as Polykaine Capital, Samsung Next, Hash, Milana Venture, Alliance Dao, Kozomodemedici and Balajisrinivasan.
Story Protocol has also secured a $82 million token-based investment from publicly available company Heritage Distilling as part of its strategic initiative to establish the Department of IP Token Treasury within its $360 million IP Token Reserve Strategy.
One X-trader has posted a SpongeBob meme, calling Zhao's exit “another shameless VC soft rug.” When another trader defended Zhao's decision, X traders retaliated by stating that the protocol's co-founder “should consider posting one good deal before attempting to emit liquidity.”
“The story has just begun, are you stepping on?” asked a trader.
“I'm curious how much money you put in your pocket,” another X user said.
Why is Jason Zhao leaving Story Protocol?
Jason Zao, one of the project's original builders, said his departure was due to his involvement in Poseidon, a full-stack data infrastructure layer created by the protocol to resolve AI's long-term tail data bottlenecks.
“I rekindled my first passion from deep times by applying AI to frontier industries like science and space. It's time to pursue this path completely,” Zhao said in his post.
3. After building five years of storylines from scratch, I'm out of my full-time role. Stay closely involved as a strategic advisor.
While incubating Poseidon, I rekindled my former passion from deep times by applying AI to frontier industries such as science and space.
-Jason Zhao (@jasonjzhao) August 16, 2025
He explained that humanity has reached a “critical inflection point” that equatesed to the new industrial revolution, based on the deployment of artificial intelligence in a variety of fields, including Web3 technology and robotics, biological disorders, and space exploration.
“Looking back, Building Story (IP) was the most meaningful experience of my life. What started out as a whiteboard sketch when I was 22 when I was 22, has become more than I imagined,” Zhao said, adding that Story IP has become the backbone protocol for IPS such as South Korean fashion brands Balmain and K-Pop Group BTS.
He also used the opportunity to announce new leadership at the helm. According to Zhao, Story is set to undertake a second phase led by Sy Lee and new CPO Andrea, who previously worked at Amazon's conversational AI.
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IP price analysis for stories
According to data from Crypto.News, Story's native token IP has dropped by more than 15% in the past week and by more than 22.35% in the past month. The announcement of Zhao's exit allowed the token to fall even deeper.
At the press conference, the tokens have traded hand at $5.58 over the past 24 hours, with market capitalization down 3.39% to $1.7 million. Since its launch in February 2025, IP has shown extreme volatility. It rose from a record low of 1 to 1 to 1 to 1 within the next few weeks of release to over 7.3. Just today, the tokens drop to the $5.55 range after being able to flirt at the $7 threshold.
More recently, Token has fallen into a declining recession as Zhao has left his leadership role in the story. Not only that, IP trading volume has declined by more than 75%, indicating a significant decline in market activity.
You might like it too: Story Protocol will launch a $360 million IP token reserve with NASDAQ registered Heritage Distilling Company
