CZ-linked YZi Labs to seek control of $412M BNB treasury firm – Why?

Binance co-founder Changpeng “CZ” Zhao and his investment firm, YZi Labs, have initiated a high-stakes campaign to seize control of the publicly-traded BNB treasury firm, CEA Industries (BNC).

In a formal consent statement filed with the SEC, CZ and YZi Labs are urging BNC shareholders to support proposals aimed at overhauling the company’s governance.

YZi Labs’ plan

The statement calls for expanding the board of directors, electing YZi Labs’ own nominees, and repealing current bylaws. This would position the influential investor firm in direct conflict with BNC’s current management.

The statement read,

“We believe the current board is in critical need of additional directors with the knowledge and experience to effectively oversee management, address the company’s stock price underperformance and operational issues, and restore investors’ faith in the company.”

Moreover, the mechanism behind the attempt to reshape BNC is centered on a consent solicitation, which is a corporate action designed to bypass a traditional shareholder meeting.

Filed as a preliminary Schedule 14A with the SEC, the statement acts as a direct appeal, asking shareholders to grant written “consent” to a series of critical proposals – To immediately expand the board of directors, to elect a new slate of directors nominated by YZi Labs, and to repeal all bylaw amendments implemented after July of this year.

If YZi Labs secures the consent of a majority of BNC’s outstanding shares, it would gain the immediate authority to restructure the board and management team. This, without the delay of convening a formal meeting, transforming this into an urgent, existential battle for control of the firm’s leadership.

Reasons behind the dispute

The core of the governance dispute stems from the significant collapse in BNC’s share price, despite the company’s successful $500 million PIPE (Private Investment in Public Equity) financing in August that saw it pivot into a digital asset treasury.

YZi Labs, a key player in PIPE, has attributed this failure directly to the current management’s performance and a perceived lack of focus.

Furthermore, YZi Labs has alleged poor investor transparency, specifically pointing to the failure to provide basic financial disclosures like regular reporting on Net Asset Value (NAV), BNB yield, or accumulation rates, alongside confusing branding that oscillates between “CEA Industries” and “BNB Network Company.”

Another pillar of the activist campaign has targeted alleged conflicts of interest involving 10X Capital, the firm responsible for managing BNC’s treasury and key figures in BNC’s leadership.

YZi Labs believes that this compromised structure has prevented management from being effective stewards of shareholder resources, warning that a failure to act will inevitably lead to the “further destruction of shareholder value.”

The prize in this escalating corporate struggle is control over one of the world’s largest disclosed digital asset treasuries. It currently holds between 480,000 to 515,000 Binance [BNB].

Acquired at an average cost of $851 per token and recently valued at around $412 million, alongside an additional $77.5 million in cash, the company’s treasury is substantial.

Final thoughts

• BNC’s battle is no longer about management; it’s about who controls one of the largest BNB treasuries in the world.
• If YZi Labs succeeds, it could set a new precedent for activist investors in digital-asset treasury firms globally.