The next phase of the continued difficulties for the digital asset treasury company (DAT) is in full swing in the markets, as companies – many of which, after stock drops of 50%-98%, trade at levels well below the crypto value on their balance sheets – sell said crypto to fund share buybacks.
FG Nexus (FGNX), an Ethereum-focused DAT firm, said on Thursday that it had sold a portion of its ether stash to repurchase inventory.
The firm revealed that it has used the proceeds from the sale of 10,922 ETH, about $33 million at current prices — along with $10 million in borrowed funds — to buy back 3.4 million of its shares. That equates to about 8% of the outstanding float purchased at an average price of $3.45, well below the reported NAV of $3.94 per share.
The news hit crypto prices, with ETH quickly falling around 2% before a modest decline. Bitcoin also fell by about 1%, but has recovered some of that decline as well.
FG Nexus now has about 40,000 ETH, along with $37 million in cash and the USDC stablecoin, according to the company’s update.
The move underscores the growing pressure on DATs, many of which have seen their share prices fall below the intrinsic value of their underlying crypto holdings. The other ETH tax company ETHZilla sold about $40 million of tokens last month to buy back shares.
Share buyback programs offer a way to close that gap, but they also raise questions about how long such companies can sustain operations while liquidating core assets.
“We plan to continue to buy back shares while our shares trade below NAV, creating an increasingly asymptotic effect on our valuation per share as the number of shares outstanding decreases and net asset value per share increases,” Chairman and CEO Kyle Cerminara said in a statement.
FGNX shares rose 2% in the early minutes of Thursday’s session, but remain lower by more than 95% from last summer’s peak.
