Trouble erupts at BNC as 10X Capital plans to abandon BNB treasury in favor of assets like Solana

A bitter governance battle has erupted at CEA Industries, the largest publicly traded BNB treasury company in the United States, which now operates as BNB Network Company (BNC) with the Nasdaq ticker “BNC” after major shareholder YZi Labs issued formal demands to asset manager 10X Capital for what it describes as mismanagement and potential abandonment of the company’s core investment strategy.

YZi Labs announced that it had issued a notice to 10X Capital, citing mismanagement, value-destructive actions, and threatened violations of contractual agreements, just a few months after the two parties partnered on a $500 million private investment in the company. 

The deterioration in their relationship has culminated in a proxy fight, with YZi Labs seeking to overhaul the board through a consent solicitation process filed with the Securities and Exchange Commission (SEC).

YZi Labs accuses 10X Capital of mismanagement 

The dispute centers on allegations that 10X Capital, which manages BNC’s digital asset treasury, plans to pivot away from accumulating BNB tokens despite representations made to investors during the summer financing round. 

YZi Labs, the family office of Binance founder Changpeng “CZ” Zhao, contends that company management has informed market participants of plans to abandon the BNB ecosystem for alternative cryptocurrencies such as Solana, contradicting the investment thesis that attracted backers.

YZi Labs also claims that the recent moves by 10X Capital in collaboration with the current CEO of BNC have negatively impacted the company’s shares, adding that the BNC’s management, most of whom it claims were appointed by 10X, have misled shareholders and significantly damaged shareholder value through various actions.

According to the family office, 10x “delayed disclosure of basic information about BNC’s assets, such as: BNB holdings, share counts, mNAV, and lack of a public dashboard providing market-standard treasury transparency similar to other DAT leaders.”

It also claimed that there was a breach of fiduciary duty by David Namdar and Hans Thomas due to “their conflict of interest in refusing to amend BNC’s unconscionable AMA terms with 10X, and their promotion of competing Digital Asset Treasury (“DAT”) ventures, including the use of company resources to do so.”

In its press release, YZi Labs stated that the combined impact of both accused parties has “led to severe underperformance of BNC’s stock relative to peers, trading approximately 19% below the pre-PIPE announcement level and 87% below the post-announcement level.”

In contrast, it pointed out that BitMine Immersion Technologies Inc has performed way better, “rising 667% from its pre-announcement close and holding nearly flat, just 2% lower, post-announcement.”

Proxy battle intensifies

YZi Labs filed a preliminary consent statement with the SEC seeking stockholder support to expand the board and elect additional directors, a mechanism that allows shareholders to vote via written consent rather than waiting for a formal meeting. The firm directly owns roughly 2.15 million shares and holds warrants for more shares. 

The company demands that “10X, and its hand-picked directors and CEO, amend the BNC AMA and release to BNC’s shareholders the fundamental information expected of a publicly traded DAT, including an operational plan, an asset-management methodology, a risk framework, a reporting package, a personnel overview, and evidence of systems, controls, and infrastructure.” 

It also added that BNC shareholders should be provided with timely updates that reflect the amount of “BNB acquired and held, the number of outstanding shares of BNC, and other critical and market-standard information customarily disclosed by other DATs.”

The notice from YZi Labs also demanded that 10X provide written confirmation by December 5 that it will comply with the BNB treasury strategy as represented to investors and “that it has not improperly disposed of BNB assets.”

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