Yes, at this point I believe the company might sell the product or manage to raise sufficiently to rehire employees and exit at a later stage. In the first scenario the payout will not be as big, but it might still be significant.

Or the payout might be less significant than the amount you paid for your options

Consider that (i) based on what you've told us the original VCs have declined to put any further money in to keep the company alive and have therefore probably written off the entire investment and (ii) any buyer probably needs to hire the founders for a couple of years to actually be able to use the IP, and therefore wants to apportion a sizeable proportion of any money they're willing to pay for the IP to their earnout package rather than compensating shareholders and creditors of the dead company.

And the product apparently doesn't generate non-trivial revenue and was built in 18 months for ~$3m by a team who are all available for hire, so it's not like there's an obvious reason for another party interested in the space to pay massive amounts for the IP - remarkable or otherwise - even if there wasn't pressure to conclude a deal asap...

I don't think crypto technology without the devs who wrote it is a very marketable thing.

You'd basically have to audit and reverse engineer a ton to even get back to where the product was before firing.

Either they've already struck a deal and the buyer didn't want all the employees, or that company isn't selling, IMO.

VCs generally have liquidation preferences on their shares, so if they put in $1m they will get their $1m back first if gains from a product sale are not in excess of $1m pro rated to their stock position. Something to keep in mind.

It's brutal to fire all the employees and survives themselves / business. But guess you're right, the next move for them might be making some money from selling the product OR raise another round.