FG Nexus sells over 10,900 ETH and borrows 10 million to buy back its shares at a reduced price, attempting to bridge the growing gap between its market valuation and the actual value of its reserves.
Pressure Mounts on Crypto Treasury Companies
The pressure is mounting for crypto treasury companies. FG Nexus has just liquidated a massive portion of its ether reserves to repurchase its own shares. This move signals a strong stance in a market where several Digital Asset Treasuries (DATs) are trading well below the real value of their assets. When a share is worth less than the cryptocurrency it represents, something is amiss. And FG Nexus has decided to take action.
A Targeted Liquidation to Stay Afloat
The company has sold 10,922 ETH, approximately 33 million dollars at the current rate. To complete the operation, FG Nexus added a borrowed 10 million. The goal: to repurchase 3.4 million shares at an average price of 3.45 dollars, far below the net value of 3.94 dollars per share.
In essence, the management is buying back its own capital at a discounted price. A common maneuver in traditional markets, but it takes on a unique dimension in the crypto ecosystem, where treasury tokenization creates direct exposure to market fluctuations.
The Crypto Markets Already Struggling
The announcement may not have shaken prices, but ETH and BTC continue to struggle. Ethereum dropped nearly 2% before stabilizing. Bitcoin also experienced a slight decline. Even though FG Nexus is not as large as Stratgey, traders quickly grasped the message: if DATs start selling their assets en masse, selling pressure could turn into a trend.
This is likely just the beginning. The sector is facing a turbulence zone similar to what miners experienced in times of stress. Declining liquidity, investors stepping back, dwindling valuations. The result: companies forced to sell what they are meant to hold.
Is the DAT Model Already Cracking?
FG Nexus is not alone. ETHZilla, another ETH-focused treasury, sold 40 million dollars’ worth of tokens last month to finance its own buyback program. The problem is systemic: many DATs are currently valued 50 to 98% below the value of their crypto assets.
This gap presents an opportunity but also a risk. An opportunity because repurchasing shares below NAV mechanically increases the value per share. A risk because the company must liquidate its reserves, which are the primary draw for investors.
How Far Can These Buybacks Go?
FG Nexus claims to want to continue buying back shares at low prices as long as the market allows. The management speaks of an asymptotic effect on the share valuation, with each repurchase increasing the weight of the NAV per share. On paper, the logic holds. In practice, it’s a gamble: that aggressive restructuring will restore confidence before the ether reserves dwindle too much.
For now, FG Nexus still holds around 40,000 ETH, as well as 37 million in cash and USDC. Enough to hold on. But in a sector where volatility reigns, maneuvering room can shrink rapidly.
A Race Against Time
FGNX gained 2% at the opening but remains 95% below its peak last summer. Share buybacks can stem the bleeding but not reverse an entire market. The battle will be fought on speed: how long can DATs burn through their assets to defend their valuation without losing their reason for existence?
