ETHZilla Corporation has acquired a 20% fully diluted interest in Karus in a transaction that combines ETHZilla’s blockchain infrastructure with Karus’s AI-driven credit analytics to bring auto-loan assets onto public blockchain rails. The deal includes $3 million in cash and $7 million in ETHZilla common stock, valuing the strategic stake at $10 million. ETHZilla said the move positions the company for expansion into the $1.6 trillion United States asset-backed securities market and accelerates its push into real-world asset tokenization.
Karus, an AI platform specializing in auto finance underwriting and portfolio analytics, is backed by Tacora Capital CEO Keri Findley. Its decisioning engine has processed over $5 billion in auto loan volume and is trained on more than 20 million historical loan outcomes. ETHZilla plans to integrate these predictive models into its tokenization infrastructure, enabling risk-segmented, on-chain loan portfolios. The company expects the first tokenized portfolios to launch in early 2026 and anticipates generating between $9 million and $12 million of adjusted EBITDA for every $100 million deployed in the Karus token.
ETHZilla will also gain access to Karus’s network of over 20,000 auto loan originators, including dealerships, banks and credit unions, providing a large funnel of potential portfolios for tokenization. Liquidity.io, in which ETHZilla holds a 15 percent interest through its parent company, is expected to serve as the exclusive exchange for trading the tokenized auto loan portfolios.
As part of the transaction, ETHZilla invested a total of $8 million to secure an initial 16 percent ownership stake through newly issued Series A preferred stock and secondary purchases, with an additional 4 percent purchased from existing holders in exchange for $2 million in ETHZilla common stock. ETHZilla will appoint a director to the Karus board and maintain certain governance rights.
The company said the partnership enables its expansion beyond digital assets into institutional fixed-income markets through transparent, AI-modeled securitization. ETHZilla’s blockchain infrastructure is designed to enable on-chain settlement and analytics, coupled with more accurate cash flow forecasting via Karus’s modeling. The company stated that demand among institutional investors for on-chain securitization is increasing, and that AI-modeled auto loans represent a significant entry point.
Investors in Karus include Stage Global Partners, Tacoma Venture Fund and Capital Eleven.
KEY QUOTES:
“Karus’s AI models are bringing the pricing and management of loan-level risk and cash flows into the future. 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.”
McAndrew Rudisill, Chairman And Chief Executive Officer, ETHZilla
“We believe that ETHZilla’s blockchain infrastructure will allow us to bring our data-driven insights directly to market. 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.”
Aaron Travis, Chief Executive Officer, Karus
“We expect that this relationship will take Karus’s loan modeling from insight to execution. 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.”
Keri Findley, Chief Executive Officer, Tacora Capital, And Board Member, Karus
