Crypto’s richest man, out of prison, turns Binance Labs into giant family office

New York – Mr Zhao “CZ” Changpeng, a few months out of prison and now worth US$70 billion (S$94 billion) thanks to the relentless Trump-fuelled crypto rally, is turning the former venture capital arm of his Binance Holdings into a family office. 

Binance Labs, which oversees about US$10 billion of crypto-related assets, will be renamed YZi Labs, according to a statement on Jan 23.

Mr Zhao brought back Ms 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 Mr Zhao has three children. 

Mr Zhao, 47, built Binance into the dominant crypto exchange while maintaining that it did not have a global headquarters.

His approach to compliance did not sit well with the US authorities, which in 2023 charged Binance and Mr Zhao with failing to prevent cyber criminals and terrorists from trading on the platform.

Mr Zhao agreed to pay a US$50 million fine, stepped down as chief executive 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”, Ms Zhang said in an interview. A spokesperson for YZi Labs said the firm does not have a formal headquarters as its staff operate remotely.

There is no immediate need for Mr Zhao to inject more money into YZi Labs, Ms Zhang said.

His US$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 the authorities is not 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.

Mr 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, Mr Zhao pledged in a post on X to focus on investments that would prioritise “impact” over returns. He also said a new endeavour named Giggle Academy, a non-profit 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 set-up all but ensures that Mr 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 US$10 billion on paper in total, according to Ms Zhang.

That would potentially put it ahead of a16z crypto, whose website says it has more than US$7.6 billion of “committed capital” across multiple funds. Polychain Capital, founded by Mr Olaf Carlson-Wee, oversaw some US$6.7 billion as at May 2024.

Before her first stint at Binance, Ms 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, Ms Zhang said.

The firm will write cheques of anywhere from US$500,000 to US$50 million, according to Ms Zhang, and it will also invest in liquid tokens.

Mr Zhao will be intimately involved in YZi Labs’ investment decisions and sit on its investment committee alongside herself, Ms Zhang said. 

“A lot of founders will approach him naturally,” Ms Zhang added. “So he will be a good sourcing contributor to the team.” BLOOMBERG