Peter Thiel’s Founders Fund Walks Away From ETHZilla As Ether Treasury Model Comes Under Fire
Billionaire investor Peter Thiel’s Founders Fund has completely liquidated its position in Ether-focused treasury firm ETHZilla, closing out an investment once valued at roughly 40 million dollars and underscoring the mounting pressure on companies that built their balance sheets around Ether instead of Bitcoin.
According to a recent filing with the United States Securities and Exchange Commission (SEC), entities associated with Thiel now hold no shares of ETHZilla. The disclosure came via an updated Schedule 13G, which replaced an earlier filing from August 4, 2025, when Founders Fund reported a 7.5% stake in the business.
At the time of that initial disclosure, Thiel-linked entities beneficially owned 11,592,241 shares in the company, then trading under the name 180 Life Sciences Corp. Those shares represented 7.5% of the 154,032,084 shares outstanding. Based on an early August share price of around 3.50 dollars, the position was worth close to 40 million dollars.
From biotech to Ether vault: 180 Life Sciences becomes ETHZilla
In July 2025, 180 Life Sciences made a dramatic strategic pivot. The company raised approximately 425 million dollars to roll out an Ether-centric treasury strategy and rebrand as ETHZilla, positioning itself as a publicly listed vehicle for large-scale ETH accumulation and deployment.
The shift was ambitious and highly symbolic: a legacy healthcare and life sciences player attempting to reinvent itself as a crypto-native treasury powerhouse, betting heavily on Ether and the broader decentralized finance (DeFi) ecosystem as its core growth engine.
Just months later, in September, ETHZilla moved to deepen that strategy by seeking an additional 350 million dollars through the issuance of convertible bonds. The proceeds were earmarked for expanding its Ether holdings and deploying those assets into DeFi protocols and tokenized real-world assets. At its peak, ETHZilla reportedly held more than 100,000 ETH on its balance sheet, placing it among the more aggressive Ether treasuries in public markets.
Forced deleveraging: ETHZilla sells tens of thousands of ETH
The company’s high-conviction Ether strategy carried significant upside potential in a bull market but also embedded substantial balance sheet risk. As market conditions deteriorated, ETHZilla was pushed into a defensive stance.
In December 2025, with crypto markets turning sharply, the company began unwinding part of its Ether position. ETHZilla sold 24,291 ETH for about 74.5 million dollars, at an average price of 3,068.69 dollars per token. The proceeds were used primarily to reduce debt, a move that aimed to stabilize its financial position but also locked in losses relative to earlier, higher price levels.
Following those sales, ETHZilla’s Ether reserves fell to roughly 69,800 ETH, a sizeable holding but far from its previous peak above 100,000 ETH. The combination of falling prices, leverage, and a concentrated treasury strategy has left the company navigating a far more constrained environment than when it first embraced its Ether-centric pivot.
Thiel’s exit as a signal: Ether treasuries under scrutiny
Founders Fund’s complete withdrawal from ETHZilla is being read as a clear signal that large institutional investors are reassessing the risks associated with Ether-heavy corporate treasuries. While Bitcoin has long been the flagship asset for corporate balance sheet diversification, Ether-focused strategies introduced a different risk profile tied to smart contract activity, DeFi yields, and tokenization experiments.
Thiel’s exit does not necessarily represent a verdict against Ether itself, but it does highlight the fragility of business models that depend on volatile crypto assets both as treasury reserves and as core drivers of corporate growth narratives. For publicly traded firms, that volatility can translate directly into earnings swings, covenant pressure, and shareholder anxiety.
Different playbooks: How other Ether whales are reacting
Not all major Ether holders are moving in the same direction. Some are doubling down, while others are staging full retreats:
– One major Ethereum-focused company recently increased its ETH exposure by purchasing an additional 40,613 ETH in early February. This brought its total holdings to more than 4.325 million ETH, with a market value of approximately 8.8 billion dollars at prevailing prices. Its strategy appears to be one of scale: accumulate aggressively, accept volatility, and bet on the long-term dominance of the Ethereum ecosystem.
– Another large institutional player has taken the opposite route, beginning to dismantle its Ether position entirely. Earlier this month, it sold 651,757 ETH for around 1.34 billion dollars, crystallizing an estimated 747 million dollars in realized losses. This kind of wholesale exit underscores the pain that some high-profile Ether bets have inflicted during the latest downturn.
Together, these contrasting approaches illustrate a fragmented institutional view on Ether. Some see the current environment as a buying opportunity; others are treating it as a final chance to cut losses and pivot away from high-volatility digital assets.
ETHZilla’s diversification gambit: From DeFi to jet engines
In an effort to reduce its dependence on simple ETH price appreciation, ETHZilla has started to explore more diversified, and in some ways more experimental, business lines. One of its headline moves has been the launch of ETHZilla Aerospace, a subsidiary designed to offer tokenized exposure to leased jet engines.
The idea is to bridge traditional aviation financing with blockchain-based asset tokenization. Investors would gain fractional exposure to revenue streams from leased engines, theoretically combining the cash flow profile of real-world assets with the liquidity and programmability of digital tokens.
This strategy reflects a broader trend among crypto-treasury-heavy firms: when the core asset underperforms or becomes too volatile, they look to tokenize other, more stable economic activities to cushion the blow. However, such diversification comes with its own complexities, including regulatory uncertainty, valuation challenges, and execution risk in highly specialized industries like aerospace.
Why Ether-centric treasuries are riskier than they look
Ether-backed corporate treasuries differ from Bitcoin treasuries in several crucial ways:
1. Technology and protocol risk
Ether is central to a broad application ecosystem: smart contracts, DeFi, NFTs, and tokenization. While this creates utility and potential upside, it also increases the attack surface. Bugs, protocol changes, and smart contract exploits can have indirect effects on Ether’s value and on yields generated through DeFi.
2. Leverage and yield-seeking behavior
Many Ether treasuries have not simply held ETH passively; they have engaged with DeFi platforms to earn yield, stake tokens, or provide liquidity. These activities often involve leverage, counterparty risk, and exposure to cascading liquidations in stressed markets. When prices fall quickly, companies can be forced into fire sales to cover obligations.
3. Accounting and volatility spillover
Fair-value accounting means price swings in ETH can flow directly into reported earnings and equity values. For a firm whose story to shareholders is tightly tied to Ether, drawdowns can trigger pressure from lenders, rating agencies, and investors-forcing strategic shifts exactly when markets are least favorable.
These dynamics help explain why Thiel’s departure from ETHZilla is being treated as more than a simple portfolio rebalance. It highlights how challenging it is to build a stable, publicly listed business around a highly volatile and structurally complex digital asset.
What Thiel’s move may imply for institutional crypto adoption
Thiel’s Founders Fund has been one of the more prominent institutional presences in the digital asset ecosystem, and its capital allocation decisions are closely watched. Exiting ETHZilla entirely could carry several implications:
– Higher bar for crypto-treasury investments: Future investments may favor companies that treat crypto assets as an adjunct to a robust core business, rather than as the business itself.
– Preference for Bitcoin-style simplicity: Investors might gravitate toward Bitcoin-focused strategies, where the narrative is clearer-digital gold, store of value-and the ecosystem is less entangled with complex DeFi mechanics.
– Demand for risk controls and transparency: Any company using Ether or other digital assets on its balance sheet may face stronger expectations around risk management frameworks, hedging strategies, and disclosure.
While Thiel’s exit does not end institutional interest in Ether, it likely raises the threshold of due diligence and the level of skepticism applied to ambitious Ether treasury pitches.
Can ETHZilla’s model still work?
Despite the negative headlines, ETHZilla’s story is not necessarily over. A leaner balance sheet, a still-significant Ether holding, and an experimental foray into tokenized aviation assets leave the company with several possible paths forward:
– Conservative treasury management: Reducing leverage, avoiding aggressive DeFi strategies, and treating ETH more like a long-term strategic asset than a trading engine.
– Focus on real-world asset tokenization: If ETHZilla Aerospace can demonstrate reliable cash flows and regulatory compliance, it could become a blueprint for other tokenized infrastructure products.
– Hybrid business narrative: Over time, ETHZilla could shift from being seen as a speculative Ether bet to a diversified digital asset and real-world asset platform, reducing sensitivity to ETH price alone.
Success, however, will depend on the company’s ability to regain trust among institutional investors, show discipline in capital allocation, and weather further market swings without returning to emergency asset sales.
The broader lesson for companies eyeing Ether treasuries
For corporations contemplating a similar path-loading the balance sheet with Ether and integrating DeFi into treasury operations-ETHZilla’s experience offers several cautionary takeaways:
– Do not build your entire corporate identity around one volatile asset.
– Use leverage sparingly, especially when that leverage is tied to crypto collateral.
– Ensure that revenue-generating operations, not speculative asset holdings, remain the foundation of the business.
– Treat tokenization and DeFi as tools, not as substitutes for a durable economic model.
As the crypto market digests the missteps of the last cycle, Ether-backed treasuries are likely to evolve. The next generation will probably feature tighter risk controls, more diversified revenue sources, and a clearer separation between speculative assets and core operations.
For now, Thiel’s Founders Fund has opted to step aside from ETHZilla’s experiment. Whether that move proves prescient or premature will depend not only on the future price of Ether, but also on whether companies like ETHZilla can successfully transform bold crypto bets into sustainable, long-term business models.