Crypto: Why Peter Thiel’s Founders Fund Walked Away From An Ether Treasury Bet

Founders Fund’s exit from ETHZilla highlights volatility, balance sheet strain and the challenges facing public Ether treasury strategies.

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

ETHZilla’s pivot from biotech to an Ether treasury strategy was aggressive. After raising $425 million and later seeking $350 million through convertible bonds, the company accumulated over 100,000 ETH, positioning itself as a leveraged equity proxy for Ether exposure.

Debt-driven models can force crypto sales at unfavorable times. ETHZilla’s sale of 24,291 ETH in December 2025 to meet debt obligations highlighted a structural weakness. Leverage combined with crypto volatility can trigger asset liquidation during downturns.

Ether treasury strategies carry more operational complexity than Bitcoin treasuries. Ether-focused models often pursue staking and DeFi yields, introducing smart contract, liquidity and counterparty risks that Bitcoin “hold-only” treasury models typically avoid.

Peter Thiel, the renowned contrarian billionaire investor and co-founder of PayPal and Palantir, has a long history of bold, unconventional bets. A US Securities and Exchange Commission (SEC) filing revealed that Thiel-linked Founders Fund entities exited ETHZilla after disclosing a 7.5% stake in 2025. ETHZilla is an Ether-focused digital asset treasury company.

The sale underscores broader market pressures on Ether treasury models, as ETHZilla’s stock has fallen sharply from its summer 2025 highs amid falling Ether (ETH) prices. 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 leveraged Ether treasury models, debt-driven balance sheets and forced asset sales. It explores what the move signals about volatility, capital discipline and the sustainability of public crypto treasury strategies.

In July 2025, biotech company 180 Life Sciences made a bold shift, raising $425 million to launch an Ether-focused treasury strategy and rebranding as ETHZilla. It positioned itself as a publicly traded vehicle for gaining exposure to Ether, with plans to build up its Ether holdings and deploy them in decentralized finance (DeFi) protocols an

Source: CoinTelegraph