Ethereum Treasury Sells ETH to Fund Share Buybacks

FG Nexus, a Nasdaq-listed company previously known as Fundamental Global Inc., has sold over 10,000 ETH to finance its share buyback program. This move comes after the company had previously expressed intentions to raise up to $5 billion to acquire Ethereum and become a major corporate holder.

Key Takeaways

• FG Nexus sold 10,922 ETH, valued at over $32 million at the time of the sale.

• The proceeds are being used to accelerate the repurchase of the company's common shares.

• FG Nexus currently holds 40,005 ETH, approximately worth $120 million.

Strategic Shift in Ethereum Holdings

FG Nexus announced its decision to sell a significant portion of its Ethereum holdings in a third-quarter shareholder update. The sale of 10,922 ETH was specifically earmarked to fuel its ongoing share buyback initiative. This action contrasts with the company's August filing with the Securities and Exchange Commission, where it outlined plans to potentially raise as much as $5 billion to purchase Ethereum, aiming to establish itself as the "world's largest corporate holder" of the cryptocurrency.

Share Buyback Program and Company Valuation

Kyle Cerminara, Chairman and CEO of FG Nexus, stated that the company has successfully repurchased 8% of its outstanding shares at a considerable discount to its net asset value (NAV). He emphasized that the company intends to continue buying back shares as long as its stock trades below NAV, believing this strategy will positively impact its per-share valuation metrics. As the number of outstanding shares decreases and the NAV per share increases, the effect on valuation becomes more pronounced.

Broader Market Context for Digital Asset Trusts (DATs)

This development occurs in a broader market context where other Digital Asset Trusts (DATs) have also engaged in selling their ETH holdings. For instance, Ethereum DAT ETHZilla recently sold approximately $40 million worth of ETH for share repurchases. While such actions have raised questions about the sustainability of DATs holding the assets they are designed to manage, many venture capital firms have indicated that this trend is unlikely to become widespread. The DAT space is reportedly experiencing a peak in funding rounds, with many DATs trading at or below their NAV, leading to predictions of consolidation within the sector.

Current Holdings and Future Outlook

Following the recent sale, FG Nexus now holds 40,005 ETH, which is valued at approximately $120 million. For comparison, Bitmine Immersion Tech remains the largest Ethereum DAT, holding over 3 million ETH. FG Nexus's strategy appears focused on optimizing shareholder value through strategic asset sales and share repurchases.

Sources

• Ethereum treasury FG Nexus, once eager to raise up to $5 billion, sells over 10,000 ETH to fund sharebuybacks, The Block.