ETHZilla Integrates Karus to Power AI-Modeled Auto Loan Tokenization

Rhea-AI Summary

ETHZilla (Nasdaq: ETHZ) acquired a 20% fully-diluted interest in Karus for $8 million consideration ($3M cash, $5M stock) plus a secondary $2M stock purchase for an additional 4% share, closing Dec 2, 2025. ETHZilla will integrate Karus's AI underwriting into its blockchain to tokenize AI-modeled, risk-adjusted auto-loan assets, with first tokenized portfolios expected in early 2026.

Karus says its models are trained on 20 million historical auto-loan outcomes, analyze 1,000 variables, and processed > $5 billion in loan volume. ETHZilla estimates $9–$12M adjusted EBITDA per $100M deployed in the Karus token and will use Liquidity.io as the expected trading venue.

Positive

• Acquired 20% fully-diluted Karus interest for $8M consideration
• Access to Karus network of >20,000 dealerships, credit unions, banks
• Karus models trained on 20 million historical auto-loan outcomes
• Karus processed over $5 billion in auto loan volume
• First tokenized portfolios planned for early 2026

Negative

• Paid $3M cash as part of the $8M investment
• Issued $7M in ETHZilla common stock as consideration
• Projected $9–$12M adjusted EBITDA per $100M is an estimate
• Trading concentration expected via Liquidity.io exclusive venue

News Market Reaction

+6.48%

13 alerts

+6.48% News Effect

+2.9% Peak in 4 hr

+$13M Valuation Impact

$221M Market Cap

0.3x Rel. Volume

On the day this news was published, ETHZ gained 6.48%, reflecting a notable positive market reaction. Argus tracked a peak move of +2.9% during that session. Our momentum scanner triggered 13 alerts that day, indicating notable trading interest and price volatility. This price movement added approximately $13M to the company's valuation, bringing the market cap to $221M at that time.

Data tracked by StockTitan Argus on the day of publication.

Key Figures

Karus stake: 20% fully-diluted interest Cash consideration: $3 million Stock consideration: $7 million +5 more

8 metrics

Karus stake 20% fully-diluted interest Ownership interest in Karus acquired by ETHZilla

Cash consideration $3 million Portion of consideration paid for Karus stake

Stock consideration $7 million ETHZilla common stock issued for Karus stake

ABS market size $1.6 trillion Estimated size of U.S. asset-backed securities market referenced

Model training outcomes 20 million auto loan outcomes Historical data used to train Karus AI models

Risk factors analyzed 1,000 variables Credit, vehicle, collateral, macro inputs in Karus models

Processed loan volume Over $5 billion Auto loan volume processed through Karus engine

EBITDA per deployment $9–$12 million per $100 million Estimated adjusted EBITDA ETHZilla expects per $100M in Karus token

Market Reality Check

Price: $5.06 Vol: Volume 2,112,462 is 2.14x...

high vol

$5.06 Last Close

Volume Volume 2,112,462 is 2.14x the 20-day average of 984,844, signaling elevated interest ahead of this AI/RWA deal. high

Technical Shares at $8.65 are trading below the 200-day MA at $21.68 and far under the $74.5 52-week high.

Peers on Argus

Peers show mixed, mostly modest moves (e.g., ABSI -2.04%, INBX -2.36%, AURA +0.6...

Peers show mixed, mostly modest moves (e.g., ABSI -2.04%, INBX -2.36%, AURA +0.62%, LXRX +0.76%, SLDB -0.17%), suggesting ETHZ’s reaction to AI auto-loan tokenization news is likely stock-specific rather than a broad sector rotation.

Historical Context

5 past events · Latest: Dec 10 (Positive)

Pattern 5 events

Date	Event	Sentiment	Move	Catalyst
Dec 10	Convertible notes redemption	Positive	-8.2%	Planned early redemption of 2028 convertible notes to streamline capital structure.
Dec 10	RWA tokenization deal	Positive	-8.2%	Agreed 15% Zippy stake and plans to tokenize manufactured home loans on-chain.
Dec 09	Financing and update	Positive	+5.0%	Additional convertible debentures, large ETH/cash balances, and crypto regulatory backdrop.
Dec 03	AI tokenization partnership	Positive	+6.5%	20% Karus stake and integration of AI auto-loan analytics into ETHZ blockchain.
Nov 14	CFO appointment	Neutral	-8.2%	Promotion of John T. Saunders to chief financial officer role.

Pattern Detected

Recent news often produced sharp moves, with multiple strategic or capital-structure updates seeing negative reactions, while digital-asset/AI-tokenization themes have aligned with positive price responses.

Recent Company History

Over the last few months, ETHZilla reported a pivot to digital-asset operations with sizable convertible note financings and a $216.7M quarterly net loss, alongside large cash and digital-asset balances. Governance and capital actions included a new CFO and share repurchases. Strategically, ETHZilla pursued tokenization initiatives, including this Karus auto-loan AI integration and a Zippy manufactured-housing partnership. Historically, AI/RWA tokenization headlines (like Karus) coincided with positive price moves, while some capital-structure steps drew negative reactions.

Regulatory & Risk Context

Active S-3 Shelf

Shelf Active

Active S-3 Shelf Registration 2025-10-06

An effective S-3ASR from October 6, 2025 registers resale of a large block of shares tied to Additional Convertible Notes. ETHZilla will not receive proceeds from these secondary sales, while selling stockholders control timing and method. The filing emphasizes extensive risk factors around ETH price volatility, regulation, staking risks such as slashing, and counterparty or custodian failures, all of which frame the backdrop for equity and tokenization initiatives.

Market Pulse Summary

The stock moved +6.5% in the session following this news. A strong positive reaction aligns with pri...

Analysis

The stock moved +6.5% in the session following this news. A strong positive reaction aligns with prior responses to ETHZilla’s AI and real‑world asset tokenization news, where the Karus announcement previously saw a 6.48% move. The deal adds a 20% stake in an AI auto‑finance platform and targets a $1.6T ABS market, but sits against a backdrop of a deeply discounted share price versus the $74.5 52‑week high and an effective resale shelf that could introduce additional equity overhang.

Key Terms

tokenization, asset-backed securities, adjusted EBITDA, Series A Preferred Stock, +1 more

5 terms

tokenization technical

"enabling the tokenization of AI-modeled, risk-adjusted auto-loan assets."

Tokenization is the process of converting real-world assets or rights into digital tokens stored on a computer network. This allows assets, such as property or investments, to be divided into smaller parts, making them easier to buy, sell, or transfer electronically. For investors, tokenization can increase access to a wider range of investments and make transactions faster and more efficient.

asset-backed securities financial

"entry point into the approximately $1.6 trillion US asset-backed securities market"

A type of investment created by pooling many similar cash‑flowing assets — like mortgages, car loans, or credit card receivables — and selling slices of that bundle to investors who then receive the payments those assets generate. Think of it as a fruit basket where buyers earn the fruit sales: investors get steady income but also take on the risk that the underlying loans stop performing or are paid off early. Investors care because these securities can provide predictable yield, portfolio diversification, and varying levels of credit and liquidity risk depending on the quality of the underlying assets.

adjusted EBITDA financial

"expected to generate $9 million to $12 million of adjusted EBITDA for ETHZilla."

Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.

Series A Preferred Stock financial

"ownership stake in Karus through the purchase of newly issued Series A Preferred Stock"

Series A preferred stock is a type of ownership share in a company that gives investors certain advantages, such as priority in receiving profits or getting their money back if the company is sold or goes bankrupt. It is often issued during early funding stages to attract investors by offering more security than common shares. This stock matters to investors because it provides a safer way to invest while still holding potential for future gains.

on-chain technical

"a leading player in bringing real-world credit on-chain."

On-chain describes actions or data that are recorded directly on a blockchain, a public digital ledger that creates a permanent, time-stamped record of transactions. For investors, on-chain activity provides verifiable evidence of transfers, ownership changes or automated program actions (like contract-driven payments); seeing these entries is like checking a bank statement and helps assess liquidity, settlement finality, fees, and transparency when judging risk and market behavior.

AI-generated analysis. Not financial advice.

Strategic transaction seeks to combine Karus's predictive credit analytics with ETHZilla's blockchain infrastructure to bring real-world credit investments on-chain

PALM BEACH, Fla., Dec. 3, 2025 /PRNewswire/ -- ETHZilla Corporation (Nasdaq: ETHZ) ("ETHZilla" or the "Company"), a technology company bringing decentralized finance infrastructure to traditional finance, today announced the acquisition of a 20% fully-diluted interest in Karus, Inc. ("Karus"), a leading artificial intelligence (AI) platform for auto finance decisioning and portfolio analytics. Pursuant to the transaction, ETHZilla plans to integrate Karus's AI-driven underwriting into its blockchain infrastructure, enabling the tokenization of AI-modeled, risk-adjusted auto-loan assets. As part of the transaction, ETHZilla acquired a 20% fully-diluted ownership position in Karus in consideration for $3 million in cash and $7 million in shares of common stock of ETHZilla. Karus is backed by Tacora Capital CEO, Keri Findley, an asset-based lending and private-credit investor funded by Peter Thiel.

"Karus's AI models are bringing the pricing and management of loan-level risk and cash flows into the future," said McAndrew Rudisill, chairman and chief executive officer of ETHZilla. "Their AI delivers institutional-grade risk forecasting that we believe will enable us to structure and tokenize loan pools with greater accuracy and transparency. Under terms of the transaction, ETHZilla will also have access to Karus's extensive network of auto loan originators, including over 20,000 car dealerships, credit unions, and banks as a source of potential portfolios for tokenization. This transaction provides ETHZilla an entry point into the approximately $1.6 trillion US asset-backed securities market,¹ and we plan to leverage our relationship with Karus to become a leading player in bringing real-world credit on-chain."

The strategic investment accelerates ETHZilla's expansion beyond traditional digital assets into large-scale real-world asset markets, which we expect will help position the Company to meet what we believe is a growing institutional demand for transparent, on-chain securitization. ETHZilla plans to bring tokenization to AI-underwritten auto loans, enabling highly predictive borrower and collateral risk segmentation powered by Karus's AI decisioning engine, which is trained on over 20 million historical auto loan outcomes and analyzes over 1,000 variables across credit, vehicle, collateral, and macroeconomic data in real time. Karus has already generated over $5 billion in auto loan volume processed through its point-of-origination decisioning engine.

We expect that this integration will enable investors to access transparent, risk-tiered exposure to auto credit with on-chain settlement and analytics. The first tokenized portfolios are expected to launch in early 2026. Liquidity.io (ETHZilla holds a 15% interest in Satschel, Inc., Liquidity.io's parent company), is expected to serve as the exclusive digital-asset exchange for trading tokenized Karus-enabled auto loan portfolios, ensuring compliant, scalable market access for investors. The Company estimates that for every $100 million deployed in the Karus token, the assets are expected to generate $9 million to $12 million of adjusted EBITDA for ETHZilla.

"We believe that ETHZilla's blockchain infrastructure will allow us to bring our data-driven insights directly to market," said Aaron Travis, chief executive officer of Karus. "By pairing our AI with ETHZilla's blockchain rails, we aim to turn predictive auto loan-performance data into a new, scalable digital fixed-income product."

"We expect that this relationship will take Karus's loan modeling from insight to execution," said Keri Findley, CEO of Tacora Capital and board member at Karus. "We believe the Liqudity.io platform will be able to give Karus's AI real-world reach by turning credit intelligence into investable digital assets."

Karus is backed by a group of investors led by Stage Global Partners, which also includes Tacoma Venture Fund and Capital Eleven.

Transaction Summary

ETHZilla invested $8 million into Karus, paid in a combination of $3 million in cash and $5 million in shares of its common stock, to acquire a 16% ownership stake in Karus through the purchase of newly issued Series A Preferred Stock and through secondary share acquisitions from existing Karus holders acquired an additional 4% of Karus' fully-diluted shares in consideration for $2 million in shares of common stock.

In conjunction with the transaction, which closed on December 2, 2025, ETHZilla will appoint a director to the Karus Board of Directors and maintain certain governance rights.

About ETHZilla

ETHZilla Corporation (Nasdaq: ETHZ) is a technology company in the decentralized finance (DeFi) industry. ETHZilla seeks to connect financial institutions, businesses and organizations worldwide by enabling secure, accessible blockchain transactions through Ethereum network protocol implementations. It generates recurring revenues through various DeFi protocols that improve Ethereum network integrity and security. ETHZilla believes it has the unique capability to bring traditional assets on-chain via tokenization. Through its proprietary protocol implementations, ETHZilla facilitates DeFi transactions and asset digitization across multiple Layer 2 Ethereum networks. ETHZilla is working to offer tokenization solutions, DeFi protocol integration, blockchain analytics, traditional-to-digital asset conversion gateways, and other decentralized finance services. To learn more, visit ETHZilla.com.

Forward Looking Statements

This press release contains "forward looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding the expected benefits of the relationship with Karus, expectations with respect to future performance, and growth of the Company; the ability of the Company to execute its plans, undertake tokenization activities and achieve future performance.

Forward looking statements are subject to numerous risks and uncertainties, many of which are beyond the Company's control, and actual results may differ materially. Applicable risks and uncertainties include, among others, failure to realize the anticipated benefits of the transaction described herein; failure to realize the anticipated benefits of the Company's previously disclosed stock repurchase program, previously announced private placements, sale of convertible notes, and related transactions, including the Company's digital asset treasury strategy; the Company's ability to achieve profitable operations; risks relating to the Company's stock repurchases, the fact that common stock share repurchases may not be conducted in the timeframe or in the manner the Company expects; expectations regarding the capitalization, resources and ownership structure of the Company; the Company's plans to continue to purchase ETH over time, the Company's digital asset treasury strategy, the digital assets held by the Company, the Company's current and anticipated yield strategies, including its participation in DeFi protocols and plans for tokenization of real world assets; fluctuations in the market price of ETH that will impact the Company's accounting and financial reporting; government regulation of cryptocurrencies; the Company's ability to repurchase shares of common stock, the timing thereof, purchase price thereof, and the fact that repurchases may not be undertaken under the stock repurchase program; changes in securities laws or regulations; changes in business, market, financial, political and regulatory conditions; risks relating to the Company's outstanding convertible notes, including the Company's ability to repay such notes, covenants associated therewith and dilution caused by the conversion thereof into common stock, and security interests associated therewith; risks relating to the Company's OTC transactions, including the Company's ability to repay such facilities, covenants associated therewith and security interests associated therewith, including security interests over certain of our cash and ETH; risks relating to the Company's previously announced ATM offering, including potential downward pressure on the Company's stock price associated therewith; risks relating to the Company's operations and business, including the highly volatile nature of the price of Ether and other cryptocurrencies; the risk that the Company's stock price may be highly correlated to the price of the digital assets that it holds; risks related to increased competition in the industries in which the Company does and will operate; risks relating to significant legal, commercial, regulatory and technical uncertainty regarding digital assets generally; risks relating to the treatment of crypto assets for U.S. and foreign tax purpose, expectations with respect to future performance, growth and anticipated acquisitions; potential litigation involving the Company; global economic conditions; geopolitical events and regulatory changes; access to additional financing, and the potential lack of such financing; and the Company's ability to raise funding in the future and the terms of such funding, including dilution caused thereby, as well as those risks and uncertainties identified and those identified under the heading "Risk Factors" in the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2024 and the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2025, as well as the supplemental risk factors and other information the Company has or may file with the SEC. Readers are cautioned not to place undue reliance on these statements. Investors should also be aware that under U.S. generally accepted accounting principles (GAAP), certain crypto assets must be measured at fair value, with changes recognized in net income for each reporting period. These fair value adjustments may cause significant fluctuations in the Company's balance sheet and income statement from period-to-period. In addition, for certain crypto assets, including ETH, which the Company holds, impairment charges may be required to be reported in net income if the market price of such assets (including ETH) falls below the cost basis at which those assets are carried on the balance sheet. Readers are encouraged to read the Company's filings with the SEC, available at www.sec.gov, for a discussion of these and other risks and uncertainties. The forward-looking statements in this press release speak only as of the date of this document, and the Company undertakes no obligation to update any forward-looking statements except as required by law. The Company's business is subject to substantial risks and uncertainties, including those referenced above. Investors, potential investors, and others should give careful consideration to these risks and uncertainties.

_______________________

¹ As of December 31, 2024, pursuant to the Bd. Governors Fed. Reserve Sys., Fed. Reserve Statistical Rel.: Z.1 Financial Accounts of the U.S., released March 13, 2025.

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SOURCE ETHZilla Corporation

FAQ

What stake did ETHZilla (ETHZ) acquire in Karus and for how much?

ETHZilla acquired a 20% fully-diluted interest in Karus for $8M ($3M cash, $5M stock) and a separate $2M stock purchase for an additional 4%.

When will ETHZilla (ETHZ) launch tokenized Karus-enabled auto loan portfolios?

The first tokenized portfolios are expected to launch in early 2026.

What data does Karus use for AI underwriting cited by ETHZilla (ETHZ)?

Karus' AI is trained on 20 million historical auto-loan outcomes and analyzes 1,000 variables across credit, vehicle, collateral, and macro data.

How much auto loan volume has Karus processed according to ETHZilla (ETHZ)?

Karus has processed over $5 billion in auto loan volume through its decisioning engine.

What financial impact does ETHZilla (ETHZ) estimate from Karus token deployments?

ETHZilla estimates $9–$12M adjusted EBITDA for every $100M deployed in the Karus token (company estimate).

Where will tokenized Karus-enabled portfolios be traded for ETHZilla (ETHZ)?

Liquidity.io is expected to serve as the exclusive digital-asset exchange for trading the tokenized portfolios.