CZ vs. YZi Labs: Battle Over External Capital Reveals Governance Rift

Binance co-founder Changpeng Zhao (CZ) has publicly refuted claims that YZi Labs, his $10 billion investment firm, is seeking external capital, despite earlier statements from the firm’s leadership suggesting openness to external investors. In a recent X post, CZ dismissed reports by the Financial Times (FT) as “misleading,” stating, “YZiLabs is not raising external funds. There is no demo. WTF is a demo for a fund? There is no pitch deck for YZiLabs ever. Not even preparation of one” title2^[2]. This contradicts remarks by Ella Zhang, head of YZi Labs, who previously told the FT that the firm has received significant interest from external investors and may consider transitioning into an external-facing fund in the future title3^[3].

YZi Labs, spun off from Binance in early 2025, operates as a family office managing CZ’s personal wealth and funds from early Binance executives, including co-founder Yi He. While the firm’s ownership structure remains opaque, it has historically aligned with CZ’s investment preferences, prioritizing the BNB ecosystem and projects like Aster. The firm has deployed capital into over 230 companies, including Polygon, PancakeSwap, and Ethena’s stablecoin platform, with approximately 70% of its portfolio allocated to digital assets title4^[4]. Recent investments have expanded into AI, biotech, and robotics, with CZ envisioning a future where crypto wallets facilitate transactions for robotic services title8^[8].

The conflicting statements highlight tensions between CZ’s public denials and YZi Labs’ strategic ambitions. Zhang acknowledged that while the firm has not yet accepted external capital, it is “forming its team” in AI and biotech and would open to external investors “when we have that expertise” title3^[3]. However, CZ emphasized that YZi Labs has no plans for a pitch deck or external fundraising, dismissing the FT’s article as a “trap” title2^[2]. This discrepancy raises questions about the firm’s governance and its alignment with CZ’s broader vision for the crypto ecosystem.

Regulatory dynamics in the U.S. may influence YZi Labs’ future decisions. Zhang noted that the SEC has shown interest in the firm’s portfolio, requesting a private demo of its projects after missing a NYSE event. She also highlighted a “friendlier” regulatory climate under the Trump administration, suggesting potential shifts in U.S. crypto policy could ease oversight for external investments title4^[4]. However, CZ’s legal challenges—stemming from his 2023 guilty plea for AML violations—remain a factor. Despite stepping down as Binance CEO, he retains a controlling stake in the exchange and has reportedly sought a presidential pardon title6^[6].

YZi Labs’ current focus on long-term investments distinguishes it from traditional venture capital firms. Zhang emphasized that the firm’s 12-person team prioritizes “super long-term” strategies, avoiding short-term profit calculations. This approach aligns with CZ’s broader efforts to position Binance as a compliance-driven entity following its $4.3 billion settlement with U.S. authorities title5^[5]. The firm’s recent support for crypto treasury deals—such as a $1 billion transaction involving former Bitmain executives—further underscores its role in shaping the institutional adoption of digital assets title8^[8].

The debate over YZi Labs’ openness to external capital reflects broader uncertainties in the crypto sector. While CZ remains cautious, the firm’s leadership appears to be preparing for a potential shift, contingent on regulatory clarity and team expansion. For now, YZi Labs continues to operate as a closed entity, balancing CZ’s personal investment goals with emerging opportunities in AI and biotech. The outcome of this internal strategy will likely influence its trajectory as a key player in the evolving crypto and Web3 landscape.