YZi Labs Criticizes CEA’s "Poison Pill" as Boardroom Conflict Escalates

Changpeng Zhao-backed YZi Labs has criticized CEA Industries for implementing a poison pill and changing its bylaws, prompting a heated governance conflict that could significantly alter control of one of the largest BNB treasury assets in the U.S.

Key Takeaways

YZi Labs has expressed disappointment in CEA's recent actions, branding them as harmful to shareholders.
CEA's stock price has plummeted over 90% from its peak despite a surge in BNB's value.
The conflict intensified when YZi Labs sought to overhaul CEA's board and was met with a poison pill strategy by CEA.
YZi Labs claims that CEA's current leadership lacks shareholder support and has failed operationally.

YZi Labs Criticizes CEA’s "Poison Pill" as Boardroom Conflict Escalates

YZi Labs Voices Concern Over CEA's Actions

YZi Labs, supported by Changpeng Zhao, has strongly condemned CEA Industries Inc. after the Nasdaq-listed company took measures that include adopting a poison pill strategy and changing its bylaws. This situation has aggravated an ongoing governance struggle that could redefine who controls one of the largest publicly acknowledged BNB treasury assets in the United States.

YZi Labs Highlights "Stockholder-Unfriendly" Moves

In a statement posted on X, YZi Labs expressed disappointment over what it views as actions detrimental to shareholders—specifically, steps taken to solidify the existing board's position at the expense of investor interests.

The investment firm, which owns about 5% of CEA’s outstanding shares, contends that these new regulations hinder shareholders' rights to act via written consent and impose procedural challenges that exceed Nevada's legal requirements.

These developments mark a stark contrast to the optimism surrounding CEA just a few months ago. In mid-2025, the company concluded a $500 million private equity investment led by YZi Labs and 10X Capital, shifting focus from vape manufacturing to a BNB-centered digital asset treasury. After revealing this strategy, CEA's stock soared over 600% in July, making it the largest publicly traded holder of BNB in the U.S. However, this upward momentum has since diminished, as CEA's shares have dropped more than 90% from their highest point, closing this week at around $6.50, despite BNB seeing approximately a 38% increase over the past six months.

Performance chart of BNB and CEA

Poison Pill Strategy Intensifies YZi Labs and CEA Board Conflict

Tensions peaked in early December when YZi Labs filed a preliminary Schedule 14A with the U.S. Securities and Exchange Commission, initiating a consent solicitation aimed at restructuring CEA’s board. This filing intends to enlarge the board, reverse bylaw amendments made post-July, and install a new set of directors proposed by YZi Labs without the need for a formal meeting.

In response, CEA’s board enacted a limited-duration rights plan, commonly referred to as a poison pill, along with bylaw amendments. This plan states that if any individual or group acquires 15% or more of the company's shares without board consent, existing shareholders will have the opportunity to purchase additional shares at a 50% discount. This strategy effectively dilutes the potential acquirer's stake and renders a takeover financially unfeasible.

YZi Labs interpreted these actions as indicative of the board's lack of support from shareholders and an effort to prioritize self-protection. They also expressed concerns regarding the postponement of CEA’s 2025 annual meeting, which was due on December 17, warning of possible further manipulative tactics concerning meeting scheduling or director nominations.

In addition to governance issues, YZi Labs challenged CEA’s public statements about its digital asset treasury strategy. The firm contested the company’s assertion that it had never contemplated alternatives to BNB, referencing remarks made by CEO David Namdar at a November 2025 industry conference, where he acknowledged exploring discussions concerning other assets, including Solana.

YZi Labs also noted potential conflicts of interest, citing contributions from Namdar and board member Hans Thomas in promoting other cryptocurrency treasury projects while holding leadership positions at CEA.

In its communications, YZi Labs accused the board of operational shortcomings, such as delays in regulatory filings, minimal investor engagement, and a lack of consistent updates regarding net asset value and BNB procurement.

The dispute now centers around the postponed 2025 annual meeting, which YZi Labs insists is crucial for shareholders to influence the company's future leadership and strategic vision. CEA has yet to respond publicly in detail to the consent solicitation.