CZ’s YZi Labs Moves To Oust CEA Industries Board After BNB Treasury Firm’s Stock Collapse

YZi Labs, the family office of Binance founder Changpeng Zhao (CZ), has launched a bid to take control of the BNB treasury company that it helped bankroll, CEA Industries (BNC).

In a recent regulatory filing, YZi Labs seeks to cancel the company’s existing bylaws, expand its board, and install its own “highly-qualified nominees as directors.” 

It cited the “destruction” of shareholder value and said CEA’s stock had underperformed the BNB token it manages.

YZi Labs also claimed that the company’s management has been slow to provide investor updates and has made “little to no media or marketing efforts” to promote the company. 

CEA Stock Implodes

The filing follows a steep share price drop for CEA in the second half of this year. The Canadian vape company’s stock had surged 550% on July 28 when it announced its plan to form the largest BNB treasury firm in the world. 

Since then, the company’s stock price has plunged approximately 89%. It closed yesterday down more than 10%, data from Google Finance shows. 

CEA share price (Source: Google Finance) 

Meanwhile, BNB’s price has risen over 30% during the same period. This is after the crypto’s price pulled back more than 39% since reaching its all-time high (ATH) of $1,370.55 on Oct. 13. 

YZi Labs Calls For Complete Overhaul Of CEA Management

As part of CEA’s crypto pivot earlier in the year, 10X Capital’s CEO David Namdar was installed as the company’s CEO, along with several other 10X Capital executives on its board.

YZi Labs had helped bankroll the company’s $500 million private investment in public equity (PIPE) deal that closed in August. Proceeds from this deal were to be used to “establish the largest publicly listed BNB Chain digital asset treasury strategy in the world,” CEA said at the time.

CZ’s family office went on to accuse Namdar of a “lack of devotions and loyalty” to the company, and claimed that he promoted other crypto treasury companies. 

YZi’s “Aggressive Consent Campaign” Is A Net Positive

10X Research shared its take on the matter in a recent email, and said that the “aggressive consent campaign” launched by YZi will lead to a “net positive” for CEA. 

The firm said that there are two likely outcomes: either YZi achieves an outright victory or there is a negotiated settlement. 

10X Research said that there is a 30% chance that the first scenario plays out, which it says will be “strongly bullish” for CEA’s share price.

Meanwhile, the firm has placed 55% odds that the second scenario will be the outcome. If this is the case, 10X Research also believes this will be a “strongly bullish” outcome for the company. 

Both of those outcomes “push the company toward stronger governance, better execution, and tighter alignment with BNB’s performance,” 10X Research said. 

It added that both of those paths will introduce new oversight, improved disclosure, and potential management or fee structure changes that “the market typically rewards.” 

The firm added that there is also a bearish scenario that could play out wherein YZi Labs fails to gain majority consent from CEA’s shareholders. However, the firm said this is “the least probable” outcome, and only placed 15% odds of this happening. 

10X Research also said that the potential downside of the third scenario is lower than the upside presented in the first two scenarios.