Key conclusions

• Founders Fund has completely exited ETHZilla after previously owning 7.5% of the shares. SEC filings show that entities linked to Peter Thiel reduced their ownership to zero by the end of 2025, signaling a decisive shift away from the Treasury’s ether-centric strategy.

• ETHZilla’s transition from a biotech to an ether treasury strategy has been aggressive. After raising $425 million and later pursuing $350 million via convertible notes, the company raised over 100,000 ETH, positioning itself as a leveraged proxy for Ether exposure.

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• Debt-based models may force cryptocurrency sales at unfavorable times. ETHZilla’s sale of 24,291 ETH in December 2025 to repay debt obligations highlighted the structural weakness. Leverage combined with the volatility of cryptocurrencies can cause assets to be liquidated during a downturn.

• Ether treasury strategies have greater operational complexity than Bitcoin vaults. Ether-centric models often pursue DeFi staking and yields by introducing shrewd contracts, liquidity risk, and counterparty risk that “hold-only” Bitcoin treasury models typically avoid.

Peter Thiel, the eminent billionaire investor and co-founder of PayPal and Palantir, has a long history of bold, unconventional bets. A U.S. Securities and Exchange Commission (SEC) filing shows Thiel-linked Founders Fund entities exited ETHZilla after disclosing a 7.5% stake in 2025. ETHZilla is an ether-focused digital asset vault company.

The sale highlights broader market pressure on ETH treasury models, as ETHZilla shares have fallen sharply from summer 2025 highs amid falling Ether (ETH) prices. This comes at a time when investor enthusiasm for leveraged or equity-based cryptocurrency exposure appears to be waning.

This article examines why Thiel’s Founders Fund left ETHZilla and examines the risks associated with Ether’s leveraged treasury models, debt-based balance sheets, and forced asset sales. He examines what this move signals about volatility, capital discipline, and the sustainability of public cryptocurrency strategies.

ETHZilla: From biotechnology to the ether vault

In July 2025, biotech company 180 Life Sciences made a bold move, raising $425 million to launch an ether-focused treasury strategy and rebrand itself as ETHZilla. It has established itself as an exchange-traded vehicle for Ether exposure, with plans to expand its Ether holdings and deploy them in decentralized finance (DeFi) protocols and tokenized asset initiatives.

Just two months later, ETHZilla sought to secure an additional $350 million in convertible notes to expand its reserves and support further projects. Reports indicated that at one stage the company had over 100,000 ETH on its balance sheet.

The idea behind this venture was elementary: secure financing, buy and hold Ether, generate potential profits through staking or DeFi activities, and offer public shareholders leveraged exposure to Ether growth.

However, this strategy has faced significant challenges as market conditions deteriorated.

Did you know? In September 2022, Ethereum transitioned from proof of work (PoW) Down proof of stake (PoS) in an event known as “Connection”, reducing energy consumption by over 99%. This is one of the most ambitious improvements ever undertaken on a live blockchain.

Key sale of ETHZilla and departure of Peter Thiel

As cryptocurrency markets retreated from earlier highs, ETHZilla began to reduce its position in Etherer.

In December 2025, ETHZilla was sold 24291 ETHgenerating approximately $74.5 million at an average price of approximately $3,068 per coin. The declared purpose of the sale was to repay the debt. Ether holdings reportedly dropped to around 69,800 ETH after the transaction.

The ETH sale was a key turning point for the company.

For a company built around an Ether vault, being forced to offload ETH to cover debt highlighted a fundamental weakness. The combination of leverage and the volatility of cryptocurrencies can result in shares being sold at any time. A strategy initially designed for patient, long-term accumulation can quickly turn into a struggle to stabilize the balance sheet.

Shortly thereafter, Thiel’s Founders Fund reduced its stake in ETHZilla to zero, exiting its position entirely by the end of 2025, according to the SEC. filings.

What are the exit signals for the 13G schedule and what not

Filing a Schedule 13G application signals a passive investment. The zero shares amendment simply means that the filer no longer owns enough shares to meet the disclosure threshold.

However, these documents do not indicate the reasons for this change. They provide no insight into whether the sales were driven by routine portfolio adjustments, risk reduction, valuation concerns or broader doubts about the Ether treasury approach itself.

In this case, time also counts. Founders Fund’s full exit came shortly after the partial liquidation of ETHZilla amid growing pressure on similar ether-focused balance sheet strategies.

Did you know? Before he became synonymous with contrarian macro betting, Peter Thiel invested In 2004, Facebook paid $500,000 for a 10.2% stake, a deal that later became one of Silicon Valley’s biggest returns.

Bitcoin and Ether vaults: store of value and layers of hidden complexity

While comparisons to Bitcoin (BTC) treasury strategies are inevitable, Ether introduces layers of complexity that Bitcoin treasuries typically avoid.

Increased volatility enhanced by financial leverage

Compared to Bitcoin, ether is characterized by greater price volatility resulting from sentiment. This behavior is due to Ether’s role as both a digital asset and fuel for the programmable blockchain platform. When treasury companies use convertible debt or other forms of leverage, withdrawals can trigger forced sales.

The pursuit of profit introduces new risks

Bitcoin treasury companies typically follow a simple “hold and appreciate” model. On the other hand, ether-focused companies often emphasize staking rewards or DeFi profits to increase profits. However, this approach comes with trade-offs:

What promises higher profits can also increase operational complexity and system vulnerabilities.

Greater narrative and perception challenges

Bitcoin vault players are benefiting from a “digital gold” narrative rooted in scarcity and the appeal of storing value. However, ether represents a dynamic, evolving ecosystem shaped by network modernization, gas pricing dynamics, changing regulatory views, and competition from other blockchains. This added complexity increases uncertainty and makes it more difficult for markets to value the strategy.

Ether batteries following different paths

Not all companies that decided to invest in ether reacted similarly to the deterioration in the cryptocurrency markets.

Some of these companies continued to accumulate ETH, trusting that the long-term expansion and utility of the Ether network would outweigh the short-term price headwinds. Others took the opposite route, liquidating all or a significant part of their farms and suffering significant losses.

This divergence in approaches suggests that the aether vault model is not inherently flawed or doomed to failure. Its sustainability depends on factors such as leverage, risk control and resilience to market cycles.

Did you know? Unlike Bitcoin’s simple transaction fee model, Ether uses “gas” to measure computational work. During the height of the non-fungible token (NFT) boom, users sometimes paid hundreds of dollars in gas fees to mint digital collectibles.

Capital structure risk in volatile asset classes

Convertible debt structures can increase potential profits in bull markets by providing relatively cheap leverage to acquire additional assets such as Bitcoin, effectively increasing profits as prices rise.

When companies trade at a premium to net asset value (NAV), they can issue equity or convertible instruments to raise capital, which increases exposure and can further increase growth.

However, during downturns, when stock discounts increase and cryptocurrency prices decline, the feedback loop can reverse:

In this type of bearish environment, even long-term investors with large Ether portfolios may choose to reduce or exit their positions to limit the risk of suffering a loss.

Opportunity cost and cleaner exposure

Today’s institutional investors have many more direct opportunities to gain exposure to Ether than in previous market cycles. Options include secure direct deposit solutions, regulated spot exchange funds (ETFs), staking products and advanced derivatives. These structures can reduce exposure to company-specific operational, execution or management risks.

On the other hand, investing via a block of shares around a leveraged cryptocurrency treasury strategy adds an additional layer of complexity and uncertainty. This includes exposure to management discretionary decisions, financing and refinancing strategies, governance structures and capital allocation priorities that may differ from the performance of the assets themselves.

Founders Fund is a venture firm with a long-standing focus on supporting high-growth operating companies with scalable, technology-enabled business models. An instrument focused on a leveraged crypto balance sheet may not be seamlessly aligned with its long-term portfolio strategy or risk preferences. Recent events, including the complete exit of Ether treasuries such as ETHZilla in the face of market pressures, highlight this selective approach to cryptocurrency exposure.