Jawfish Games appears to have taken its last breath. The Seattle online gaming startup, led by former professional poker player Phil Gordon, laid off its staff this week and is now in the process of “wrapping up operations,” according to a message posted to a Google Group Wednesday.

According to the message from Gordon, Jawfish was under contract to be acquired for $20 million by a “local” game company in November, a deal that later fell apart.

In the message to the Google Group, Gordon said that the acquiring company canceled the transaction “completely out of the blue” just a few days before it was to close.

“We’d spent all our remaining runway on legal to get to a definitive agreement. No further acquisitions were on the table, and no financing was available — the games space has gotten incredibly soft and difficult. Acquirer then knew we were broke and couldn’t afford to sue, so they refused to pay the break fee. Classy. Three days away from being the hero and turning a business plan on the back of a napkin into $20m in 20 months, now I’m the goat that ran an award-winning startup into the ground and lost everyone’s money. That’s the way the world works, I suppose.”

Jawfish raised $2.6 million in July 2012, including cash from The Founders Fund, the venture capital firm led by former PayPal CEO Peter Thiel. The cash was to be used to build out the Jawfish online gaming tournament platform, a service that was used by Seattle’s Big Fish for real-time tournament-style game called Match-Up!

A computer scientist and the first employee at Netsys Technologies, Gordon made a name for himself as an author and former commentator on Bravo’s popular ”Celebrity Poker Showdown” television show.

“We have some supremely talented, entrepreneurial minded folks here that I’d love to see well placed,” Gordon said in the message. He adds that the company plans to hold a “beauty pageant” on Friday at the Jawfish offices in order to place some of the company’s top engineers and developers, with a finder’s fee to be paid to the company to offset outstanding debt and legal bills from the “failed acquisition.”

We’ve reached out to Gordon for additional comment about the situation, and we will update when we hear back. (Update/Correction: When I wrote this earlier today, I didn’t realize that I had sent my email about the situation to the wrong email address for Phil Gordon. I apologize for the error. I have since spoken with Gordon, and he declined to comment).

Jawfish last year won top honors at Launch Festival, the big San Francisco entrepreneurial pitch fest hosted by Jason Calacanis. Judges were impressed with the company’s approach, with Google’s Don Dodge proclaiming in his remarks that Jawfish “is going to make a lot of money.”