The reports and the denials
On September 20, the Financial Times reported that YZi Labs, a $10 billion portfolio vehicle, was preparing to admit outside investors for the first time. Within days, CZ issued a denial on X, calling the story “false” and stressing that YZi Labs remains privately funded. Sources close to the company echoed that stance in follow-up coverage by Reuters and CoinDesk, emphasizing that no external fundraising process has been launched.
Still, the rumors highlight the delicate balance CZ faces. Having pleaded guilty in the United States last year to violating anti-money laundering requirements, served a four-month sentence, and paid a $50 million fine, Zhao remains under heightened scrutiny from U.S. regulators.
What external money would change
Governance and disclosure hurdles
If YZi Labs were to admit outside investors, it would almost certainly need to introduce a formal fund governance structure, including audited financials, KYC and AML procedures for limited partners, and clear firewalls separating Zhao’s influence from investment committees. These are standard in venture capital but could be amplified by Zhao’s legal history.
Jurisdiction roulette
Industry lawyers note that domiciling the fund in Singapore, the Cayman Islands, or the United Arab Emirates could ease some compliance burdens while still attracting institutional capital. However, any U.S. LP money would trigger significant regulatory oversight, potentially reopening Zhao’s exposure to American enforcement.
Reputation and dealflow
For portfolio companies, CZ’s brand remains a double-edged sword. His track record of scaling Binance into the world’s largest exchange is undeniable, but ongoing regulatory headwinds may make some founders cautious. At the same time, the promise of YZi Labs’ deep capital reserves could prove attractive to AI and robotics startups seeking rapid scale.
Why the market is watching
Since leaving Binance leadership, Zhao has positioned YZi Labs as a diversified tech incubator, with a tilt toward frontier industries like AI, bioengineering, and advanced computing. For the crypto sector, the fund’s trajectory is symbolic: if CZ can attract mainstream institutional capital, it signals that high-profile figures can re-enter financial markets even after major legal settlements.
But if outside money never materializes, YZi Labs will likely remain a private family office with limited transparency. “Whether YZi takes external capital isn’t just about one fund,” said a Singapore-based venture partner. “It’s a litmus test for how much regulatory baggage high-profile crypto founders carry into new industries.”
The bottom line
For now, YZi Labs insists it is not raising outside funds. Yet the discussion alone shows how carefully Zhao’s next steps will be scrutinized—not only by regulators, but by investors weighing whether crypto’s most prominent figures can reinvent themselves in broader technology markets.