CZ’s $10B YZi Labs Considers External Funding

YZi Labs stands as a formidable force in the investment landscape, managing an estimated $10 billion in assets. Unlike traditional venture capital or hedge funds, its capital base has been intensely private, sourced almost exclusively from the personal wealth of its founder, Changpeng ‘CZ’ Zhao, and a select group of early Binance insiders, including co-founder Yi He. This structure has allowed the fund to operate with significant autonomy and discretion. However, this insular model may be changing. According to a report by the Financial Times, Ella Zhang, the head of YZi Labs, has confirmed that the firm is ‘weighing plans to open the fund to outside capital and external investors,’ signaling a potential paradigm shift for the secretive investment vehicle.

This is not the fund’s first foray into external capital. In 2022, YZi Labs accepted approximately $300 million from outside investors. Yet, in a move that underscored the sheer scale of its internal resources, the fund later returned a portion of that capital. The reason cited was the ‘overwhelming scale of capital already under management.’ This previous experience highlights a key dynamic: investor interest in gaining exposure to CZ’s investment strategy has consistently outstripped the fund’s perceived need for external capital. Ella Zhang’s statement that ‘There’s always a lot of external investors interested’ confirms this persistent demand.

The primary catalyst for reconsidering an external-facing structure appears to be a confluence of market forces. Investor appetite for sophisticated crypto and blockchain investment opportunities has matured significantly since 2022. Institutional players, once wary, are now actively seeking avenues to deploy capital into the digital asset ecosystem. Access to a fund steered by CZ, one of the most influential figures in the industry’s history and backed by the deep expertise of the Binance ecosystem, represents a uniquely attractive proposition. This growing demand is creating compelling pressure for YZi Labs to formalize its relationship with the external investment community.

Perhaps the most significant external factor influencing this deliberation is the changing regulatory landscape in the United States. The analysis points to a ‘more open regulatory stance under the Trump administration’ as a key consideration. For the crypto industry, which faced intense scrutiny and enforcement actions in recent years, the prospect of a more predictable and supportive regulatory environment is a powerful tailwind. A shift in policy could unlock new investment opportunities for a fund like YZi Labs and reduce the operational risks associated with external fundraising and compliance, making the proposition more viable than it was just two years ago.

Should YZi Labs proceed, the move would mark a significant moment in the convergence of traditional finance (TradFi) and the crypto world. Opening the fund to external limited partners would provide a structured, institutional-grade channel for capital to flow into the strategies developed by CZ and his team. This could accelerate the maturation of the crypto investment space, setting a new benchmark for how major industry-native capital allocators operate. The involvement of external investors would also likely bring increased transparency and governance requirements, further integrating YZi Labs into the global financial mainstream.

However, the transition is not considered imminent. Ella Zhang tempered expectations, stating, ‘We will eventually consider turning it into an external-facing fund. We just think it’s not there yet.’ This caution suggests that while the winds are shifting, YZi Labs is meticulously evaluating the timing. The fund’s leadership must balance overwhelming investor interest with the need to ensure that any structural change aligns with its long-term strategic goals and operational capacity. The decision will hinge on a continued positive regulatory trajectory and the fund’s confidence in managing the complexities of a broader investor base without compromising its investment edge.