Summary
– SEC filings show entities tied to Founders Fund reduced their reported ETHZilla stake to zero by end‑2025 after earlier disclosing roughly a 7.5% position.
– ETHZilla, which rebranded from 180 Life Sciences, shifted from biotech to an aggressive Ether treasury strategy, raising hundreds of millions and at one point holding more than 100,000 ETH.
– In December 2025 ETHZilla sold 24,291 ETH for roughly $74.5 million to meet debt obligations, highlighting how leverage can force asset sales at bad times.
– Ether treasuries are operationally more complex than simple bitcoin hold‑only treasuries because staking and DeFi activity add smart‑contract, slashing, liquidity and counterparty risks.
What the filings show
A Schedule 13G amendment filed with the SEC indicates Founders Fund–linked entities no longer hold a reportable stake in ETHZilla by the end of 2025. Schedule 13G only signals the filer fell below disclosure thresholds; it does not explain motives. Still, the timing—coming after ETHZilla’s debt‑driven ETH sale and a wider retreat from leveraged crypto exposure—suggests a reassessment of the tradeoffs involved in an equity‑wrapped Ether treasury.
How ETHZilla pivoted
In mid‑2025 180 Life Sciences repositioned itself as ETHZilla and raised about $425 million to buy and operate an Ether treasury. The plan: acquire large Ether reserves, earn yield by staking and interacting in DeFi, and give public equity investors a way to participate in Ether upside. Management later pursued roughly $350 million of convertible debt to scale reserves and initiatives. At one point the company is reported to have held north of 100,000 ETH.
Why leverage mattered
The model depended on continued market access, stable prices, and prudent leverage. When conditions cooled, ETHZilla needed liquidity to satisfy debt commitments and sold 24,291 ETH in December 2025 for roughly $74.5 million, trimming reserves to about 69,800 ETH. That sale illustrates a core vulnerability: financing structures that amplify accumulation in rallies can force defensive sales during downturns, crystallizing losses and converting a strategic accumulation into balance‑sheet firefighting.
What a Schedule 13G exit does — and doesn’t — tell us
A Schedule 13G amendment reporting zero shares only confirms the filer holds less than the disclosure threshold. It doesn’t reveal whether sales were tactical, reactionary, driven by governance concerns, or part of routine rebalancing. However, paired with ETHZilla’s debt‑related liquidation and a shrinking market for equity wrappers around crypto treasuries, Founders Fund’s exit signals that selective institutional investors are reconsidering exposure to company‑level operational and refinancing risks.
How Ether treasuries differ from Bitcoin treasuries
Comparisons to bitcoin treasury companies are common, but Ether introduces additional dimensions:
– Operational complexity: Ether treasuries often stake or deploy into DeFi to earn yield. Those activities expose holders to smart‑contract bugs, validator slashing, locked staking windows and counterparty credit events. Bitcoin hold‑only treasuries avoid most of these layers.
– Price and narrative sensitivity: Ether’s valuation is tied to network usage, protocol upgrades and fee dynamics, not just a store‑of‑value story. That makes valuation and investor sentiment more sensitive to ecosystem developments.
– Leverage behavior: Instruments like convertible debt can boost accumulation quickly in upcycles but create refinancing and liquidity risk in corrections, pressuring managers to sell.
Capital‑structure feedback loops
Relying on debt and convertible instruments can create a self‑reinforcing cycle:
– Falling ETH prices reduce net asset value (NAV), widening discounts to NAV.
– Falling share prices make new equity more expensive and dilute existing holders.
– Refinancing becomes harder, potentially forcing asset sales to meet obligations.
This cycle turns financing choices into an independent risk factor for treasury vehicles.
Different responses from Ether holders
Not all Ether treasury managers reacted the same way to market stress. Some stayed the course and continued accumulating, accepting temporary paper losses in pursuit of long‑term appreciation. Others liquidated significant holdings and crystallized losses. The difference typically comes down to leverage levels, governance discipline, risk controls and access to liquidity.
Cleaner ways to get Ether exposure
Institutional investors can obtain Ether exposure without taking company‑level operational risk by using regulated custody providers, staking‑enabled products, spot ETFs (where available), futures and other derivatives. Those instruments remove governance discretion and refinancing risk that an equity wrapper adds on top of the underlying asset’s price risk. For a venture investor whose strength is backing operating companies, the added managerial and financing risks of a leveraged public treasury may not fit the strategy.
Takeaway
ETHZilla’s conversion from a biotech issuer to an Ether treasury was a bold, high‑conviction experiment in packaging crypto exposure into a public equity vehicle. The combination of market softening, aggressive capital structures and the operational nuances of staking and DeFi made the model fragile. Founders Fund’s exit—reported shortly after ETHZilla’s debt‑motivated ETH sale—underscores that capital structure and execution risk can outweigh the upside narrative for some investors. Ether treasury approaches can succeed, but they require conservative leverage, tight risk controls, clear governance and explicit planning for liquidity stress that distinguishes them from simpler bitcoin hold‑only strategies.
