Changpeng Zhao founded YZi Labs considers opening to external investors

Former Binance CEO Changpeng Zhao’s $10 billion venture firm YZi Labs is weighing plans to open up to external investors.

Speaking to the Financial Times, YZi Labs’ head Ella Zhang said the $10 billion investment firm, which manages Zhao’s personal fortune and funds from a few early Binance insiders, is considering a transition into an external-facing fund. 

Plans still under consideration

While no immediate timeline has been set, Zhang noted that investor interest has been steady since the firm’s inception.

“There’s always a lot of external investors interested,” Zhang said. “We will eventually consider turning it into an external-facing fund. We just think it’s not there yet.”

YZi Labs previously accepted about $300 million in outside capital back in 2022, but later returned part of it. 

Zhang explained that the decision to scale back came from the overwhelming size of capital already under management, paired with a desire to maintain long-term alignment. 

“The reason we returned [the funds] is because the funds we were managing already were massive,” she said. 

“The demand is very high… but for the majority of the projects we invest in, we’re not in a rush to exit. It’s hard to deliver what [external investors] expect.”

Currently, YZi Labs invests across crypto, AI, and biotech sectors. Zhang noted that the firm is still building out its team in AI and biotech and that opening up to external investors would carry “a huge responsibility.” 

Once the internal capabilities are in place, the door to institutional capital may open more formally.

If YZi does begin accepting US investors, it would mark a turning point, bringing increased regulatory scrutiny and formalization. Already, there are signs of thawing tensions between crypto firms and U.S. regulators.

Zhang revealed that the Securities and Exchange Commission recently requested a private showcase of YZi’s portfolio companies, after SEC chair Paul Atkins missed the firm’s demo day at the New York Stock Exchange. 

“Paul Atkins and other commissioners, they are very open-minded,” she said.

Zhang also commented on the quickly changing regulatory tone under the Trump administration, noting that crypto entrepreneurs who previously left the US are now returning to Silicon Valley.

Zhao, meanwhile, has stepped away from managing Binance entirely. After pleading guilty in 2023 to US criminal charges related to anti-money laundering failures, he resigned and served a four-month prison sentence. 

Though he no longer runs the exchange, Zhao remains its largest shareholder and continues to promote its ecosystem, particularly BNB, the native token of the Binance Smart Chain.

For Zhao, YZi Labs represents a clean break from exchange operations and a new chapter as a long-term allocator. 

But with billions already under management, finding enough high-quality investments remains a challenge. 

Zhang recalled Zhao telling her directly, “‘Your challenge is to deploy.’ It’s just so hard to find so many good enough assets to meet our criteria.”

YZi labs expands its portfolio

YZi Labs has made several high-conviction bets in recent months. Last week, it doubled down on its investment in Ethena Labs, the team behind the synthetic dollar USDe. 

The fresh capital was earmarked to expand USDe’s reach across centralized and decentralized exchanges and to fund new offerings like USDtb, a fiat-backed stablecoin pursuing GENIUS compliance, and Converge, an institutional settlement layer being developed with partners like BlackRock and Securitize.

In August, YZi backed USD.AI, a stablecoin project that allows AI hardware firms to post GPUs as collateral in exchange for yield-bearing stablecoins.

Meanwhile, in July, YZi invested in Aspecta, a blockchain infrastructure project focused on unlocking liquidity in illiquid assets like pre-TGE shares and locked tokens.

And around the same time, it also spearheaded the launch of the BNB Treasury Company.

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