The Event in Detail

YZi Labs, the $10 billion investment firm linked to Binance co-founder Changpeng “CZ” Zhao, is reportedly considering opening its portfolio to external investors and transitioning into a public-facing fund. Currently operating as a family office, the firm primarily manages CZ's personal fortune and capital from early Binance executives, including Yi He. Ella Zhang, Head of YZi Labs, confirmed significant external interest, stating that while the firm is not yet ready, becoming an externally focused fund is an eventual goal. The firm previously accepted approximately $300 million in outside funding in 2022 but later returned a portion, citing its substantial internal capital and a "super long-term" investment horizon that did not align with short-term return expectations of typical venture capital firms.

Financial Mechanics and Strategic Positioning

YZi Labs manages a portfolio valued at $10 billion, with digital assets constituting approximately 70% of its holdings. The firm's investment strategy emphasizes an "ultra-long-term" approach, distinguishing it from conventional venture capital firms focused on annual multiples. Its extensive portfolio includes over 230 companies, with notable investments in Aptos Labs, Polygon, 1inch Network, Mysten Labs, LayerZero, and Sky Mavis. Recently, YZi Labs doubled its investment in Ethena Labs' USDE synthetic stablecoin. The firm has also supported a $1 billion transaction involving former Bitmain executives and led a $500 million fundraising initiative to convert a Nasdaq-listed vaping company into a BNB treasury vehicle. Beyond crypto, YZi Labs is strategically expanding into Artificial Intelligence (AI) and biotechnology, reflecting a broader vision articulated by CZ that robotics will leverage crypto wallets for transactions.

Market Implications and Regulatory Landscape

The potential opening of YZi Labs to external investors could significantly impact the crypto venture capital landscape, signaling increased capital flows into crypto and Web3 startups. However, this transition is set against a complex regulatory backdrop. Accepting U.S. investors would likely increase regulatory scrutiny for YZi Labs, particularly given CZ's 2023 guilty plea to a U.S. criminal charge concerning Anti-Money Laundering (AML) violations and Binance's subsequent $4.3 billion settlement with U.S. authorities. CZ served a four-month prison sentence in 2024 and is reportedly seeking a presidential pardon from Donald Trump. Speculation regarding a pardon intensified following changes to CZ's social media profile, coinciding with a surge in the BNB token price, which briefly exceeded $1,000. Regulatory shifts under a potential Trump administration, perceived as more crypto-friendly, are also influencing YZi Labs' considerations. The Securities and Exchange Commission (SEC) reportedly requested a private demonstration of YZi Labs' portfolio companies, indicating a potentially more receptive stance from U.S. regulators.

Expert Commentary

Ella Zhang highlighted the challenge of deploying the firm's substantial capital effectively. "Your challenge is to deploy. It's just so hard to find so many good enough assets to meet our criteria," Zhang quoted CZ as saying. She also noted that while there is consistent external investor interest, the firm prioritizes building internal capacity in emerging sectors like AI and biotech before taking on the "huge responsibility" of managing outside capital in those areas. Zhang observed a return of crypto founders to Silicon Valley, encouraged by figures like SEC Chair Paul Atkins and other commissioners, whom she described as "very open-minded." These statements underscore a cautious, long-term approach to market engagement while acknowledging evolving regulatory receptiveness in the U.S. for crypto-related investments. Despite his legal obligations, CZ remains Binance's largest shareholder and a vocal supporter of the BNB token, maintaining significant influence within the crypto ecosystem. The firm's disciplined investment strategy aims to identify high-quality assets to ensure sustainable growth, rather than pursuing short-term gains for external stakeholders.