Franklin Ethereum Trust (EZET) is a Delaware statutory trust grantor trust structured as a passive ether ETF. Its balance sheet is structurally simple: the sole material asset is ether held in custody at Coinbase Custody Trust Company, LLC, and the sole material liability is the accrued Sponsor fee payable to Franklin Holdings, LLC. At December 31, 2025, reported total assets were $59.7M, of which $57.5M is the fair value of 19,348.465 ether (Level 1, principal-market pricing at $2,971.55/ETH per the filing). A receivable of $2.25M represents ether sale proceeds not yet settled (redemption activity). Total liabilities are $2.26M, consisting almost entirely of this receivable offset and the accrued Sponsor fee of $10,491. Net assets at period end were $57.48M. Under a liquidation lens, the recovery posture is straightforward and favorable relative to a conventional going concern: the sole substantive asset is liquid digital currency with an observable market price. Applying the standard liquidation haircut framework is not strictly applicable here because ether is neither AR nor inventory nor PP&E; it is a liquid digital asset. A practitioner would apply a market-execution haircut reflecting bid-ask spread and block-sale impact rather than a formulaic 60-70% inventory haircut. At current scale ($57.5M position across 19,348 ETH), execution risk is modest but non-zero given ether's historical intraday volatility. The Sponsor fee liability ($10,491) is de minimis. There are no debt obligations, leases, pension obligations, or long-term liabilities. The trust structure eliminates tax at the entity level (grantor trust classification). Recovery to equity upon hypothetical liquidation closely tracks ether spot price minus execution friction. The primary risk to recovery is ether price itself: the filing discloses ether depreciated 28.06% in Q3 FY2026 (October-December 2025), from $4,130.84 to $2,971.55/ETH. Net assets contracted from $90.9M at September 30, 2025 to $57.5M at December 31, 2025, a 36.8% decline driven by price depreciation plus net share redemptions of $8.9M. Cost basis of ether held is $67.4M versus fair value of $57.5M, representing an unrealized loss position of approximately $9.9M as of period end. The filing notes ether cost at March 31, 2025 was $21.6M fair value for 11,780 ETH; the fund deployed significant new capital across the nine-month period ($72.5M in purchases) at average prices well above the December 31 close, contributing to the underwater cost basis. No off-balance sheet arrangements exist. No extraordinary expenses were incurred during the period. The prior filing (September 30, 2025) showed net assets of $90.9M and 22,020 ETH at $4,130.84/ETH, confirming the QoQ deterioration is entirely mark-to-market driven.
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