CZ's YZi Labs Seeks Board Control of BNB Treasury in Shareholder Shakeup

A dramatic corporate power play is unfolding around one of the world's largest public BNB treasuries, as Changpeng Zhao's investment vehicle moves to seize control, citing a massive destruction of shareholder value.

Introduction: A Boardroom Battle for Billions in BNB

In a move that signals deep internal turmoil, YZi Labs, the investment firm linked to Binance founder Changpeng Zhao (CZ), has launched an aggressive bid to take control of the board of CEA Industries. This public company, which rebranded itself last year to hold a massive treasury of BNB, has seen its stock price collapse nearly 90% from its peak. Through a regulatory filing, YZi Labs has accused current management of destroying stockholder value and is seeking to install its own nominees, effectively wresting control of the company and its holdings of over 515,000 BNB tokens. This shareholder shakeup highlights the volatile intersection of traditional corporate finance and cryptocurrency treasury strategies, raising critical questions about governance, transparency, and value creation in the emerging sector of publicly-listed crypto asset holders.

The Anatomy of a Boardroom Coup: YZi Labs' Demands

YZi Labs has laid out a clear and confrontational roadmap for seizing control of CEA Industries. In its filing with regulators on Monday, the investment firm made several specific demands. First, it seeks to cancel all bylaw changes enacted by the company since July 2023. Second, it proposes to expand the size of CEA’s board of directors. Finally, and most critically, it aims to elect its own “highly-qualified nominees” to fill these new board seats.

The justification provided is stark. YZi told shareholders that these “measures are necessary to address the continued destruction of stockholder value at BNC and to ensure that the Company is being run in a manner consistent with your best interest.” This language indicates a complete breakdown in confidence between the major financial backer and the operational management team installed after the company’s pivot to crypto. If a majority of outstanding shareholders side with YZi Labs, the firm would gain de facto control over the strategic direction of what was pitched as “the largest publicly listed BNB Chain digital asset treasury strategy in the world.”

From Vapes to Vaults: CEA Industries' Crypto Pivot

CEA Industries’ transformation is a case study in the rapid corporate rebranding fueled by crypto market enthusiasm. Previously a Canadian vape company, CEA saw its stock surge an astonishing 550% on July 28 after announcing its intention to become a major BNB treasury holding company. The stock peaked at $57.59 that same day.

The cornerstone of this pivot was a $500 million private investment in public equity (PIPE) deal that closed in August 2023. YZi Labs was a key financier in this deal, which was intended to fund the establishment of the BNB treasury strategy. As part of this shift, investment firm 10X Capital’s CEO, David Namdar, was installed as CEO of CEA, and several other 10X Capital executives joined CEA’s board. This move represented a full-scale takeover of corporate leadership by figures from the traditional and crypto investment world, tasked with executing a novel digital asset strategy.

A Staggering Decline: The Destruction of Shareholder Value

The financial performance since the pivot has been catastrophic for shareholders. As of Monday’s close, shares in CEA Industries (ticker: BNC) were trading at $6.47, representing a decline of approximately 89% from the July 28 peak of $57.59. The stock fell more than 10% on Monday alone amid news of YZi Labs’ board challenge and is down over 20% year-to-date in 2024. Notably, it is now trading below its price level before the crypto pivot was announced.

This precipitous drop forms the core of YZi Labs’ grievance. Despite being bankrolled with half a billion dollars and holding a substantial cache of a major cryptocurrency, the company’s market valuation has evaporated. The filing points to this dramatic underperformance as clear evidence that current management has failed in its fiduciary duty to create value for investors who backed its new vision.

Allegations Against Management: Silence and Divided Loyalties

YZi Labs’ filing levels serious accusations against CEO David Namdar and the current board. The investment firm claims that CEA’s management has been “slow to provide investor updates” and has made “little to no media or marketing efforts” to promote the company and its unique treasury strategy to the broader market.

More damningly, YZi accused Namdar of a “lack of devotion and loyalty” to CEA. It claims he has promoted other crypto treasury companies while at the helm of CEA. This allegation suggests that the CEO may not be fully focused on or committed to maximizing value for CEA shareholders—a cardinal sin in corporate governance. Consequently, YZi floated that any new board it installs “should explore the selection of a new CEO,” signaling that Namdar’s position is directly in jeopardy if the coup succeeds.

The BNB Treasury: Assets Under Fire

At the heart of this battle is a substantial hoard of BNB tokens. According to corporate reports, CEA Industries holds 515,054 BNB, purchased at an average cost basis of $851.29 per token. This treasury forms the primary underlying asset of the company.

The value of this holding is intrinsically linked to the market price of BNB itself. At the time of writing, BNB is trading at a three-month low of approximately $829. It has declined almost 40% since reaching its all-time high of $1,367 in mid-October 2023, a drop that aligns with broader macroeconomic pressures affecting the entire crypto market. Despite this recent weakness, BNB is still up 17.8% year-to-date in 2024.

The relationship between the company’s market value and its crypto holdings is measured by its mNAV (market Net Asset Value) ratio. Currently, CEA’s mNAV stands at 0.79x. This means the market is valuing the entire company at a discount (79%) to the pure market value of its BNB holdings alone, not even accounting for any other corporate assets or potential future strategy. This discount reflects significant market skepticism about management’s ability to generate additional value or properly steward these assets.

Historical Context: Crypto Treasuries and Corporate Governance Challenges

The rise of publicly-listed companies holding large cryptocurrency treasuries is a recent phenomenon with mixed results. Companies like MicroStrategy have pioneered this model with Bitcoin, often trading at premiums to their holding value during bull markets due to investor confidence in management’s strategy and execution.

CEA’s situation presents a contrasting example. Instead of trading at a premium, it trades at a steep discount. The drastic fall from its post-announcement peak mirrors patterns seen in other “pivot” narratives where traditional companies announce crypto strategies, experience short-term speculative pumps, and then struggle with execution, communication, and credibility—leading to long-term sell-offs. The intense friction between YZi Labs and 10X Capital executives also underscores a recurring theme in this space: the challenge of aligning incentives between visionary crypto founders/backers and the traditional corporate managers brought in to execute complex new strategies.

Conclusion: A Proxy War for Crypto's Corporate Future

The showdown between YZi Labs and CEA Industries’ board is more than a simple shareholder dispute; it is a proxy battle for how cryptocurrency treasury companies should be governed and operated. On one side is CZ-linked capital, demanding aggressive action to rectify what it sees as managerial failure and value destruction. On the other is an installed management team whose strategy has so far resulted in a collapsing stock price despite controlling a valuable asset.

For investors and observers in the crypto space, this conflict serves as a critical case study. It highlights the importance of transparent communication, unwavering managerial focus, and clear strategic execution when marrying traditional corporate structures with digital asset strategies. The outcome will signal whether major crypto backers are willing to take direct operational control when their passive investments falter.

What to watch next: The key developments will be shareholder response to YZi Labs’ proposal and any formal reaction from CEA Industries’ current board and CEO David Namdar. Furthermore, monitoring CEA’s mNAV ratio will reveal whether market confidence returns based on either the current team’s new initiatives or simply on the prospect of a board overhaul. Finally, this event may prompt closer scrutiny from regulators on the governance and disclosure standards of publicly-listed entities whose primary assets are volatile cryptocurrencies. The resolution will set a precedent for accountability and power dynamics in this nascent but rapidly growing corner of both traditional finance and the crypto ecosystem