Why Peter Thiel’s Founders Fund Walked Away From an Ether Treasury Bet

key takeaways

• Founders Fund exited ETZilla entirely after previously holding a 7.5% stake. SEC filings show that entities linked to Peter Thiel had reduced their ownership to zero by the end of 2025, signaling a decisive retreat from the ether-focused public treasury strategy.

• EThzilla’s pivot from biotech to ether treasury strategy was aggressive. After raising $425 million and subsequently seeking $350 million via convertible bonds, the company accumulated more than 100,000 ETH, establishing itself as a leveraged equity proxy for ether exposure.

• Debt-driven models may force crypto sales in adverse times. EThzilla’s sale of 24,291 ETH in December 2025 to satisfy debt obligations exposed a structural weakness. Leverage combined with crypto volatility can trigger asset liquidations during recessions.

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

Peter Thiel, the famous contrarian billionaire investor and co-founder of PayPal and Palantir, has a long history of bold, unconventional bets. US Securities and Exchange Commission (SEC) filings revealed that Founders Fund units linked to Thiel exited EThzilla after it disclosed a 7.5% stake in 2025. ETHzilla is an Ether-focused digital asset treasury company.

The sale underscores broader market pressure on the Ether treasury model, as ETHzilla stock has fallen sharply from its summer 2025 high amid falling prices for Ether (ETH). This comes at a time when investor enthusiasm for leveraged or equity-wrapped crypto exposure appears to be waning.

This article examines why Thiel’s Founders Fund exited EThzilla and analyzes the risks of the leveraged Ether treasury model, debt-driven balance sheet, and forced asset sales. Explores what the move signals about volatility, capital discipline, and sustainability of public crypto treasury strategies.

ETHzilla: From Biotech to Ether Treasury

In July 2025, biotech company 180 Life Sciences made a bold change, raising $425 million to launch an ether-focused treasury strategy and rebranding as EThzilla. It has positioned itself as a publicly traded vehicle for exposure to Ether, with plans to build up its own 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 through convertible bonds to expand its reserves and support further projects. Reports indicate that the company had over 100,000 ETH on its balance sheet at one point.

The idea behind the effort was straightforward: secure funding, buy and hold Ether, generate potential returns through staking or DeFi activities and offer public shareholders leveraged exposure to Ether’s growth.

However, the strategy faced significant challenges as market conditions deteriorated.

Do you know? In September 2022, transition to Ethereum Proof of Work (PoW) To Proof of Stake (PoS) In an incident known as “merger“Reducing its energy consumption by more than 99%. This is one of the most ambitious upgrades ever made on a live blockchain.

Significant sale of EThzilla and exit of Peter Thiel

As crypto markets retreated from their previous highs, EThzilla began reducing its Ether positions.

In December 2025, ETHzilla sold 24,291 ETH, generating approximately $74.5 million at an average price of approximately $3,068 per coin. The stated purpose of the sale was to meet loan repayments. Following the transaction, its ether holdings reportedly dropped to around 69,800 ETH.

The sale of ETH marked a turning point for the company.

For a company built around an ether treasury, being forced to sell ETH to cover debt exposes a fundamental weakness. The combination of leverage with crypto’s volatility can trigger the sale of holdings at any time. A strategy originally designed for patient, long-term accumulation can quickly turn into a scramble to stabilize the balance sheet.

Shortly afterward, Thiel’s Founders Fund reduced its ownership in EThzilla to zero and exited its position entirely by the end of 2025, according to an SEC filing.

What is Schedule 13G Exit Signal and what it is not

Schedule 13G filings indicate passive investments. An amendment reporting zero shares simply means that the filer no longer has enough shares to meet the disclosure threshold.

However, these documents do not reveal the reasons behind the change. They provide no information on whether the selling stemmed from routine portfolio adjustments, risk reduction, valuation concerns or widespread skepticism about the Ether Treasury outlook.

Time also matters in this case. Founders Fund’s full exit comes on the heels of EThzilla’s partial ether liquidation amid growing pressure on similar ether-centric balance sheet strategies.

Do you know? Before becoming synonymous with contrarian macro bets, Peter Thiel investment $500,000 for a 10.2% stake in Facebook in 2004, a deal that later became one of Silicon Valley’s largest venture returns.

Bitcoin vs Ether Treasuries: Store of Value vs Layers of Hidden Complexity

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

Volatility increased by leverage

Ether experiences greater price volatility driven by underlying sentiment than Bitcoin. This behavior stems from Ether’s role as both a digital asset and fuel for programmable blockchain platforms. When Treasury companies rely on convertible debt or other forms of leverage, a downturn may trigger forced selling.

The pursuit of yield introduces new risks

Bitcoin treasury companies generally follow a straight hold-and-appreciate model. On the other hand, Ether-focused companies often emphasize rewards or DeFi yields to increase returns. However, this approach comes with trade-offs:

What promises high returns may also increase operational complexity and systemic vulnerabilities.

Big narrative and perception challenges

Bitcoin treasury players benefit from the lack of price attractiveness and the “digital gold” narrative inherent in storage. However, the Ether network represents a dynamic, evolving ecosystem shaped by network upgrades, gas fee dynamics, changes in regulatory considerations, and competition from other blockchains. This additional complexity increases uncertainty and makes it difficult for markets to value the strategy.

Ether accumulators following diverse paths

Not all companies opting for Ether treasury reacted the same to the decline in crypto markets.

Some of these companies continued to accumulate ETH, with the belief that Ether’s long-term network expansion and utility will outweigh near-term price volatility. Others took the opposite path, liquidating all or a significant portion of their stake and realizing substantial losses.

This divergence in approach suggests that the Ether treasury model is not inherently flawed or doomed across the board. Its stability depends on factors such as leverage levels, risk control and resilience to market cycles.

Do you know? Unlike Bitcoin’s simple transaction fee model, Ether uses “gas” to measure computational work. During the peak 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 enhance potential returns in bullish markets by providing the benefit of relatively low costs to acquire additional assets such as Bitcoin, effectively increasing returns when prices rise.

When companies trade at a premium to their net asset value (NAV), they may issue equity or convertible instruments to raise capital, thereby increasing holdings and allowing for further appreciation.

However, in a recession, when equity discounts rise and crypto prices fall, the feedback loop may reverse:

In such a bearish environment, even long-term investors with large Ether portfolios may decide to reduce or exit positions to limit downside risk.

Opportunity cost and clean performance

Today’s institutional investors have far more direct avenues to gain Ether exposure than in earlier market cycles. Options include secure direct custody solutions, regulated spot exchange-traded funds (ETFs), staking-enabled products and sophisticated derivatives. These structures can reduce exposure to company-specific operational, execution or governance risks.

In contrast, investing through an equity wrapper around a leveraged crypto treasury strategy adds an additional layer of complexity and uncertainty. This includes the risk that management’s discretionary decisions, financing and refinancing strategies, governance structures and capital allocation priorities may differ from net asset performance.

Founders Fund is a venture firm that has historically focused on supporting high-growth operating companies with scalable, technology-driven business models. A vehicle focused on leveraged crypto balance sheets may not intuitively align with your long-term portfolio strategy or risk preferences. Recent developments, including its complete exit from ether treasury plays like EThzilla amid market pressure, underscore this selective approach to crypto exposure.