In a move that signals a significant shift in sentiment towards Ether-centric investments, Peter Thiel’s Founders Fund has fully divested its stake in ETHZilla, a company that once positioned itself as a leveraged equity proxy for Ether exposure. The decision comes at a time when the crypto market is grappling with volatility and regulatory scrutiny, raising questions about the sustainability of leveraged crypto treasury models.
The Rise and Fall of ETHZilla
ETHZilla’s journey began in July 2025 when biotech company 180 Life Sciences underwent a radical transformation, raising $425 million to pivot into an Ether-focused treasury strategy. The company, rebranded as ETHZilla, aimed to become a publicly traded vehicle for gaining exposure to Ether. It quickly amassed over 100,000 ETH, positioning itself as a key player in the burgeoning crypto space.
However, the aggressive strategy soon faced challenges. In December 2025, ETHZilla was forced to sell 24,291 ETH to meet debt obligations, a move that underscored the structural weaknesses of leveraging volatile assets. This sale, which netted the company about $74.5 million at an average price of $3,068 per coin, marked a turning point, leading to a significant reduction in its Ether holdings.
Peter Thiel’s Exit: A Vote of No Confidence?
Peter Thiel, the billionaire investor known for his contrarian bets, had initially backed ETHZilla with a 7.5% stake. However, SEC filings reveal that Thiel-linked entities, including Founders Fund, had reduced their ownership to zero by the end of 2025. This complete exit suggests a loss of confidence in the company’s ability to navigate the volatile crypto market and maintain its strategic vision.
Thiel’s decision to divest from ETHZilla is particularly noteworthy given his history of bold and unconventional investments. The move may indicate a broader shift in investor sentiment, as leveraged or equity-wrapped crypto exposure becomes less attractive in a market characterized by increasing regulatory pressure and economic uncertainty.
The Risks of Leveraged Ether Treasuries
ETHZilla’s experience highlights the inherent risks of leveraging volatile assets like Ether. The combination of high leverage and crypto market volatility can trigger forced asset sales, especially during downturns. This is in contrast to Bitcoin-focused treasuries, which often adopt a simpler
About the Author
