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ETHZilla, a decentralized autonomous trust backed by Peter Thiel’s Founders Fund, sold approximately $74.5 million worth of ETH on December 18, 2025, to repay outstanding debt. This marks a strategic retreat from its original decentralized asset trust (DAT) model amid shifting market conditions and liquidity pressures.
The sales, executed through OTC desks, reduced ETHZilla’s holdings from over 30,000 ETH to around 20,000, with proceeds directed toward clearing $50 million in borrowed funds and covering operational costs. The trust’s announcement cited “evolving regulatory and market dynamics” as reasons for exiting the DAT structure, which aimed to provide investors with tokenized exposure to a diversified basket of digital assets managed on-chain.
The company stated in the announcement on X that it intends to use all or most of the proceeds to fund the redemption. After the sale, ETHZilla is still the owner of approximately 69,802 ETH, with a value of around $207 million.
As part of redeeming our outstanding senior secured convertible notes, ETHZilla sold 24,291 ETH for approximately $74.5 million. We plan to use all, or a significant portion, of the proceeds to fund the redemption. The dashboard below excludes cash on the balance sheet which… pic.twitter.com/c5HMDrf48X
— ETHZilla (@ETHZilla_ETHZ) December 22, 2025
Looking ahead, ETHZilla stated that its value will increasingly be driven by revenue and cash flow from its real-world asset tokenization business. Accordingly, the company is discontinuing its mNAV dashboard effective immediately, though it plans to provide periodic balance sheet updates. While the daily dashboard is dead, the firm promised to maintain transparency regarding its Ethereum stash via standard quarterly filings”.
A prominent crypto analyst (@capybaraReborn) posted a scathing recap on X on December 20, 2025, detailing the rapid unraveling of ETHZilla (ETHZ), the decentralized autonomous trust backed by Peter Thiel’s Founders Fund. The project entered 2025 with a $500 million PIPE deal that revived a failed biotech shell company, attracting sophisticated investors including Electric Capital and Cyber Fund, with a three-pronged mission.
Let’s recap what happened at $ETHZ
This summer @ETHZilla_ETHZ entered the market through a PIPE deal, putting near half a billion dollars on the balance sheet of a failed biotech company, giving it a new life.
Amongst investors, Peter Thiel, Electric Capital, Cyber Fund and a…
— Capybara Stocks (@capybaraReborn) December 22, 2025
According to the post, the thesis collapsed after a poorly negotiated deal with Hudson Bay added $350 million in restricted cash but cost the trust $87 million, roughly a quarter of its assets, when ETH failed to rally as planned. The analyst described subsequent management decisions as “last-ditch” speculative bets on overpriced startups that wiped out another quarter of value, doubling down on errors instead of cutting losses.
The post criticized founder Rudsill for refusing to accept responsibility, instead pursuing leveraged RWA acquisitions that risk total shareholder wipeout. The analyst believes the stock could recover to $15 – $16 per share if management halts operations, reverses bad deals, and resigns or liquidates, but called current prices “dramatically oversold” while capping upside at $10–12. They announced an end to daily commentary, suggesting the hundreds of millions lost by PIPE investors will force resolution, though not quickly.
Launched in mid-2025 with $150 million initial capital, ETHZilla had positioned itself as a pioneer in on-chain venture-style investing, but faced challenges including low liquidity for its tokens, high borrowing costs, and investor redemptions amid bitcoin’s late-year volatility. It is therefore quite the irony that a company backed by a “decentralization” advocate (Thiel) is retreating from an on-chain model to back traditional, centralized loans (auto/mortgage).
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