Interactive Strength liquidates $50M FET bet, subordinates common shareholders
In brief
- Interactive Strength liquidated its $50M FET treasury by Q4 2025, unwinding a failed crypto bet financed through senior secured convertible notes.
- July dividend issued 619,584 preferred shares creating $1.239M liquidation preference ahead of common shareholders.
- Company raised $2M via senior secured convertible note and faces substantial going-concern doubts.
The original FET bet
Interactive Strength built its crypto treasury with $55.56 million of senior secured convertible exchangeable notes sold for $50 million. The deal carried a 10% original issue discount, 12% annual interest, and a lien over treasury-subsidiary assets. That structure gave creditors strong protections—but also locked in a fixed cost that the FET bet had to clear.
By late 2025, the thesis had failed. The company liquidated all digital assets and satisfied the original FET-backed notes through token sales and separate remainder notes. ATW and DWF, the original note holders, received unsecured remainder notes of $3 million and $4.5 million respectively—leaving Interactive Strength with $7.5 million in face principal still outstanding.
Preferred shares wipe out common equity
On July 28, Interactive Strength paid a dividend with 619,584 preferred shares, creating $1.239 million of minimum base liquidation preference ahead of common holders. This wasn't a cash payout. It was a capital restructuring that legally subordinated every common shareholder.
Preferred stock ranks ahead of common equity in a liquidation. The July distribution issued 281,344 Series A shares (compounding an 8% cumulative dividend annually) and 338,240 Series C shares (compounding at 15% and ranking ahead of Series A, Series B, and common stock). The totals climbed to 4,696,089 Series A and 3,187,097 Series C—growth of 6.37% and 11.87% respectively from the pre-distribution counts.
Liquidity and going-concern risk
At the May 20 filing date, Interactive Strength had unrestricted liquidity of about $1.3 million against a $22.4 million working-capital deficit and cash of $4.738 million. The company warned of substantial doubt about its ability to continue as a going concern.
On July 21, an investor exercised a pre-existing warrant. Interactive Strength issued a $2 million senior secured convertible note due in July 2027, plus warrants exercisable for 305,810 common shares. That fresh capital bought runway, but the subordination was already locked in. A 1-for-7 common-stock reverse split on June 30 had consolidated share counts before the preferred issuance, but couldn't reverse the capital structure's new hierarchy.
