The richest Chinese person manipulates the BNB treasury, and a nameless small-cap stock rises 600%.

On July 28, after days of rumors, the BNB treasury “orthodox army” ultimately landed in a small nicotine e-cigarette company named VAPE – this small-cap stock, which previously had a market capitalization of less than ten million dollars, unexpectedly became the lucky one personally chosen by the richest person in the Chinese community.

The news was leaked in advance, causing the stock to rise more than 1800% before the market opened. After the opening, the stock price jumped from Friday’s closing price of 8.88 USD to an intraday high of 82.88 USD.

According to informed sources, Binance’s related investment team had already initiated the shell company acquisition and private financing preparations for the BNB treasury project as early as the beginning of July. Another informed source indicated that to prevent the shell resources from encountering “mouse warehouse” risks before they were implemented, the team had simultaneously purchased multiple small shell companies in the US stock market, and only finalized the target VAPE at the last moment.

Behind this stock price fluctuation is a PIPE private financing agreement—amounting to 500 million dollars, co-led by 10X Capital and YZi Labs, aiming to make VAPE the largest publicly listed BNB treasury company in the world.

This is not a retail frenzy, but a capital experiment with a precisely structured design—a new type of arbitrage path regarding “compliant holding of BNB + valuation premium of listed companies,” which may also be a breakthrough in the parallel narrative of the Binance ecosystem.

VAPE, a company that was previously obscure, is being remembered by the broader capital markets as a key variable in the narrative of “BNB Financial Reserve.”

Breakdown of BNB treasury operation path: from shell to valuation leverage

On July 28, VAPE (formerly CEA Industries) officially announced the PIPE private placement led by 10X Capital in collaboration with YZi Labs, with an initial financing scale of 500 million USD, including 400 million in cash + 100 million in crypto asset subscriptions. Additionally, if all warrants are exercised, the total financing scale could expand up to 1.25 billion USD.

This funding is not only astonishing in scale but also clearly positioned: VAPE aims to create the largest publicly traded BNB treasury company in the world, bringing BNB into the capital markets to attract compliant funds to participate in the BNB Chain ecosystem through an asset allocation model.

This also means that VAPE is no longer a hardware or retail supplier of the past, but has transformed into a financial structural platform focused on BNB, integrating the value and revenue mechanisms of BNB into the capital structure of listed companies.

After the PIPE financing is completed, VAPE will be led by a core team with institutional and digital asset backgrounds—David Namdar (co-founder of Galaxy Digital, currently a senior executive at 10X Capital) will serve as CEO; Russell Read (former CIO of CalPERS, currently CIO of 10X Capital) will take on the role of CIO; Saad Naja (a senior operator with a background at Kraken and Exinity) will also join the company’s executive team.

Meanwhile, 10X Capital will serve as the asset manager for the BNB treasury, responsible for structural design, capital operations, and subsequent strategy implementation; while YZi Labs provides strategic support to facilitate the smooth execution of the PIPE allocation. Over 140 institutions and crypto funds (such as Pantera Capital, Blockchain.com, GSR, Arrington, etc.) participated in this financing, forming a strong capital endorsement.

Rhythm BlockBeats breaks down this VAPE announcement, stating that the funds raised will be used to establish a long-term treasury strategy focused on BNB. In the next 12–24 months, VAPE will build an initial BNB position and scale up through methods such as ATM (At-The-Market) issuance; it considers participating in BNB staking, lending, DeFi protocol yield mechanisms, etc., to obtain structured returns while setting a conservative risk framework.

This operational model is similar to MicroStrategy’s BTC treasury model, but focuses on BNB, which has stronger ecological use, supplementing the logic of holding assets for appreciation through income-generating strategies, thereby providing cash flow and premium space.

After the PIPE, VAPE will become one of the largest publicly traded companies providing single Layer-1 blockchain exposure.

In simple terms, the final form of this round of financing is to equip the company with a “cryptocurrency arsenal” worth 1.25 billion USD to buy BNB. In contrast, SharpLink (SBET), as one of the earliest companies to bet on the ETH treasury concept, has a total financing of only 525 million USD.

After the transaction goes live: how will the stock price move?

After the PIPE signing, VAPE announced that this financing is expected to be completed by July 31, 2025. By then, the funds will be received, and the company’s updated capital management strategy will also take effect. According to the announcement, the company’s common stock will continue to trade on the NASDAQ capital market, with the stock code remaining “VAPE.”

The essence of PIPE financing is a form of “raising funds at a discount” through a directed issuance of shares. In simple terms, this means that the company “sells stocks at a discount” to specific investors in exchange for a large sum of funds. In the VAPE main financing, the amount is 500 million USD, with 400 million in cash, meaning that the other 100 million is in BNB assets. It also comes with a warrant mechanism that can reach up to 1.25 billion USD. In short, the company will issue a large number of new shares and warrants to PIPE investors.

This will directly lead to two structural results: the shareholding ratio of existing shareholders will be diluted. If calculated on a fully diluted basis, the voting rights and revenue rights of old shareholders will significantly decline; the company’s capital structure will become more complex. Warrants, lock-up clauses, staged exercise mechanisms, etc., will make the company’s valuation method in the capital market more inclined towards a “structural model” rather than a fundamental model.

With the completion of the PIPE placement, the equity structure of VAPE will shift from “holding type” to “circulating type”, especially after the exercise of the warrants, the company’s freely circulating capital will see a significant increase in magnitude.

This point is particularly evident in the PIPE terms of VAPE: this round of financing has designed a large proportion of warrant mechanisms, allowing investors to subscribe for new shares of the company at a price lower than the market price at specific time points, forming a typical warrant + placement combination arbitrage structure.

Image source: crypto-economy

Specifically, these types of warrants generally have the following characteristics - extremely low pricing: far below the public market stock price, creating potential arbitrage space; phased unlocking: some warrants are unlocked immediately upon financing completion, while others have mechanisms such as price triggers and time rolling; possible dynamic execution in line with market price: when the stock price exceeds a certain threshold (e.g., PIPE pricing 2-3 times), it may trigger forced exercise or accelerated conversion clauses.

Under this structure, the price behavior of VAPE is not only driven by fundamental factors but is also influenced by the actions of PIPE investors. Once the valuation deviates from the level of real assets, such structures create strong cash-out motives, which in turn become a source of liquidity shocks.

So, when it comes to the stock price level, will it ultimately trend upwards or pull back?

We combine existing PIPE cases to analyze VAPE. This structural game roughly presents the following three-stage path:

Phase One: Expectation-Driven Phase (Already Occurred)

On July 28, after the PIPE announcement was released, VAPE’s stock price surged 800% in pre-market trading, soaring from $8.88 to the $80 range, triggering multiple circuit breakers. At this time, the market had not yet focused on the fundamentals, pricing based solely on the narrative expectations in the announcement, creating a strong speculative sentiment.

Due to the financing not yet being received, the warrants have not been unlocked, and the market is in a structure of “low circulation, high sentiment, and no supply,” the stock price is extremely sensitive to expectations.

Phase Two: Structure Release Phase (After Transaction Completion)

It is expected that after the transaction is completed on July 31, the funds will be in place, and some PIPE investors will receive initial shares and transferable warrants.

At this time, the market enters a delicate range: if the stock price maintains a high level, warrant holders may choose to quickly exercise their rights and cash out, creating price pressure; if the market loses confidence in the treasury model, early arbitrageurs will exit at the first opportunity; if the company discloses that it has not built up BNB as expected, it will also weaken the expectation of “on-chain NAV anchoring.”

At this stage, volatility has significantly increased, and pricing dominance has shifted from “value anchoring” to “funding behavior.”

Phase 3: Valuation Reversion or Secondary Narrative Initiation

If BNB performs strongly and the company releases on-chain revenue details, the market may refocus on the “Crypto NAV+” model, driving valuations into a second increase; if market sentiment cools or PIPE parties continue to cash out, the company’s stock price will return to the asset value center or enter a liquidity vacuum zone.

This is also a key stage where most PIPE projects ultimately diverge—some enter into secondary long-term trading logic, while others become one-time cases of “telling the story and funds exiting.”

The rise may come from structural scarcity; the fall often starts with a slowdown in liquidity. Both paths have repeatedly appeared in other PIPE cases. Therefore, the fluctuation is not actually a value judgment, but a contest of the speed of liquidity release.

Shell company selection: What conditions does VAPE meet?

If we trace back the story of VAPE, we will see a completely different starting point.

VAPE was formerly known as CEA Industries, an engineering equipment company focused on indoor agriculture and cannabis temperature control systems. Its subsidiary Surna mainly provides services such as LED lighting, air circulation, and hydroponic equipment, with customers primarily being cannabis growers in North America. The company has long been in a state of low growth, low profit, and low market capitalization, referred to as the “three lows.”

According to data from StockAnalysis and TipRanks, the company’s total revenue will be less than 6 million USD by the end of 2024, with market capitalization lingering below 10 million USD for the long term, and the trading volume in the US stock market is extremely low.

In 2024, the company attempted its first strategic transformation: acquiring the Central Canadian vape chain brand Fat Panda for 18 million CAD, which has 33 stores and annual revenue exceeding 38 million CAD, with an EBITDA margin close to 21%. This is an attempt to shift from a “hardware seller” to “end retail,” marking VAPE’s movement from equipment supplier to consumer brand.

But this is not enough to support the company’s valuation reassessment.

So the company VAPE has not been eye-catching in the past, and it can even be said to be “a sunk cost in the capital market.” But it is precisely these criticized flaws that become the most valuable traits of a “shell company”—a shell that is small enough; a clean enough equity structure; a market capitalization space that is yet to be activated; and a narrative vacuum in the crypto market (BNB exposure).

Whether VAPE can become a case similar to “MicroStrategy of BNB” remains to be verified. However, it is certain that it is no longer the original e-cigarette company, but has transformed into a programmable shell nested within the capital game - the shell is a publicly listed company in the U.S. stock market, the core is structured financial instruments, and the soul is the ability to manipulate narratives and emotions.

Control and Core Team: Who is Driving this Financing?

Behind this transformation experiment of “exchanging assets for valuation”, the role played by VAPE is that of a financial vehicle rather than an operating entity. What truly drives this transformation is a trading team whose core tool is capital structure—a mixed team with backgrounds in finance and crypto. Their goal is not merely to complete a financing round, but to construct a self-consistent valuation closed loop: from primary allocation, to on-chain asset building, and then to narrative release in the secondary market.

After the PIPE signing is implemented, the company’s actual control logic has changed. The original management team, primarily with backgrounds in industry and retail, does not possess the capability to lead on-chain treasury and structured asset management. The real control gradually shifts to the financing leaders - 10X Capital and YZi Labs.

10X Capital: The leading institution for this PIPE, which has long focused on SPAC mergers, cross-border capital arbitrage, and structured transactions, is a typical “leveraged capital engineer.” Since 2023, this team has attempted to expand the MSTR model to ETH, SOL, and even the LSD track. This bet on BNB clearly aims to replicate the MicroStrategy treasury + valuation compound structure.

YZi Labs: The strategic consultant for this round of transactions, widely regarded in the industry as having actual connections with the CZ family fund, is a key behind-the-scenes driver of BNB’s financialization and the path to becoming a publicly listed company. The endorsement from this institution is almost seen as a clear support from the Binance camp. In the VAPE project, it participated in the early selection of shell resources, assisted in driving the media’s communication rhythm, and collaborated with some investors and market-making teams to develop the narrative strategy of “building positions - exposure - valuation derivation.”

The biggest feature of this capital structure arrangement is that VAPE is no longer the creator of value itself, but is designed as an intermediary platform for value release. 10X Capital provides structure and rhythm, YZi Labs provides narrative and channels, and BNB is embedded as the underlying asset. Together, the three have completed a closed-loop design from the asset side to the market side.

Whether the story holds true ultimately depends on whether the on-chain positions can be fulfilled and whether market confidence can be sustained. For most retail investors and observers, the emergence of VAPE is not the end, but rather a prelude to the accelerated arrival of the “structural arbitrage era.”

Image source: bankless

Epilogue

In a conversation among investors circulating on Telegram, someone calculated a figure: the active capital available for VC and liquidity fund allocation in the entire crypto industry is likely only around 7–15 billion dollars. In this round, VAPE’s PIPE is expected to raise up to 1.25 billion dollars, which, in extreme cases, could absorb about 5–10% of the industry’s investable capital.

“I’ve never seen a non-BTC / ETH / SOL project that can siphon off so much funding in a single deal.” He said, “And this company is likely never to cycle this money back into the industry.”

This is not only a risk problem due to the excessively high concentration of funds, but it also means that the already tense liquidity in the cryptocurrency industry is being “siphoned” by an unverified model.

During a bull market phase, liquidity should be used to activate diverse innovations and provide flexibility for early projects in DeFi, payments, infrastructure, and more. However, these funds are now concentrated on a “story shell” that revolves around a nested PIPE structure and shell resource speculation. If VAPE is successful, it will certainly replicate more crypto versions of MicroStrategy; but if it fails, it could become a typical case of industry-level resource misallocation.

Capital writes narratives and can also create bubbles. In the intersection of crypto finance, everything seems like a victory of structural arbitrage, until the moment liquidity completely dries up, when one realizes whether there is ‘blood-making ability’.