(Bloomberg) -- Changpeng “CZ” Zhao, a few months out of prison and worth $70 billion thanks to the relentless crypto rally, is turning the former venture capital arm of his Binance Holdings Ltd. into a family office.
Binance Labs, which oversees about $10 billion of crypto-related assets, will be renamed YZi Labs, according to a statement on Thursday. Zhao brought back Ella Zhang, who helped set up Binance Labs in 2018 and left two years later, to run the outfit. YZi Labs will also manage the wealth of Binance co-founder Yi He, with whom Zhao has three children.
Zhao, 47, built Binance into the dominant crypto exchange while maintaining that it didn’t have a global headquarters. His approach to compliance didn’t sit well with US authorities, who in 2023 charged Binance and Zhao with failing to prevent cybercriminals and terrorists from trading on the platform. Zhao agreed to pay a $50 million fine, stepped down as CEO and was sentenced to four months in custody. He was released in September.
YZi Labs, a play on the Binance co-founders’ names, is now “purely a family office investment vehicle,” Zhang said in an interview. A spokesperson for YZi Labs said the firm doesn’t have a formal headquarters as its staff operate remotely.
There’s no immediate need for Zhao to inject more money into YZi Labs, Zhang said. His $69.8 billion fortune is ranked 22nd in the world by the Bloomberg Billionaires Index, which estimates it to consist entirely of his stake in Binance Holdings.
A billionaire turning his business into a family office after a brush with authorities isn’t entirely without precedent.
SAC Capital Advisors, founded by legendary investor Steve Cohen, pleaded guilty in 2013 to reaping hundreds of millions of dollars in illegal profits and allowing a culture of criminality that rewarded brazen insider trading. Cohen — who consistently denied wrongdoing — was never charged or sued, though he agreed not to manage outside money for two years, and turned his firm into a family office.
After his release from a low-security California prison, Zhao pledged in a post on X to focus on investments that would prioritize “impact” over returns. He also said a new endeavor named Giggle Academy, a nonprofit online education platform, would be a big part of his life. By then, Binance had begun the process of severing ties with the venture capital unit.
His new setup all but ensures that Zhao remains a dominant force in crypto.
Before its rebranding, Binance Labs invested in hundreds of projects, including the likes of Sky Mavis, Aptos Labs, LayerZero, Polygon and The Sandbox. Its assets predominantly consist of tokens issued by projects it invested in and are worth more than $10 billion on paper in total, according to Zhang.
That would potentially put it ahead of a16z crypto, whose website says it has over $7.6 billion of “committed capital” across multiple funds. Polychain Capital, founded by Olaf Carlson-Wee, oversaw some $6.7 billion as of May 2024. Before her first stint at Binance, Zhang spent about five years as an investment principal at Kleiner Perkins.
YZi Labs will have a remit to expand beyond crypto and invest in artificial intelligence and biotech companies, according to the statement. It is hiring specialists in those fields and intends to expand its team of nine to as many as 20 people, Zhang said.
The firm will write checks of anywhere from $500,000 to $50 million, according to Zhang, and it will also invest in liquid tokens. Zhao will be intimately involved in YZi Labs’s investment decisions and sit on its investment committee alongside Zhang, she said.
“A lot of founders will approach him naturally,” Zhang added. “So he will be a good sourcing contributor to the team.”
