CZ Denies FT's YZi Labs Fund Report, Calls It 'False News'

Former Binance CEO Changpeng Zhao, widely known as CZ, has recently found himself embroiled in a significant public dispute following a report published by the Financial Times concerning his new Web3 and artificial intelligence (AI) venture, YZi Labs. The article in question alleged substantial financial dealings and fundraising efforts by YZi Labs, prompting a swift and vocal denial from Zhao, who labeled the report as entirely baseless.

The Financial Times' piece outlined that Zhao was supposedly preparing to open a formidable $10 billion investment portfolio to external investors. This claim was reportedly bolstered by statements from Ella Zhang, who heads YZi Labs. Zhang was quoted acknowledging considerable interest from potential investors, going so far as to mention that Paul Atkins, Chair of the US Securities and Exchange Commission (SEC), had even requested a private demonstration of the fund's capabilities. Furthermore, the report suggested that YZi Labs' portfolio predominantly consisted of digital assets, with over 50 token proposals having been reviewed in recent months, indicating active and extensive investment activities.

However, CZ took to the social media platform X (formerly Twitter) to forcefully challenge these assertions. In a series of posts, he unequivocally dismissed the Financial Times' account as "complete false news," asserting that it was riddled with "fake, wrong, and made-up information." Zhao directly addressed several key points raised by the report, stating clearly that YZi Labs is neither currently engaged in raising an external fund nor has it scheduled any demonstrations for prospective investors. He expressed genuine bewilderment at the very concept of a "demo" for an investment fund, further clarifying that YZi Labs has never developed a pitch deck, nor has the organization pursued any external investment discussions since its recent rebranding.

Beyond refuting the financial claims, CZ also clarified the operational independence of YZi Labs. He emphatically stated that the venture operates entirely separately from the cryptocurrency exchange Binance. This directly countered the Financial Times' implication that YZi Labs had "spun out" of Binance following Zhao's legal challenges with US authorities in November 2023. This distinction is crucial for understanding the nature of YZi Labs as a distinct entity, unburdened by the regulatory scrutiny that Binance has faced.

Zhao also used the opportunity to address what he perceives as a mischaracterization of his legal predicament. He underscored that he pleaded guilty to a single violation of the Bank Secrecy Act (BSA), specifically a failure to maintain an adequate anti-money laundering program. He took issue with the Financial Times' portrayal of this as "money laundering violations," emphasizing the critical difference between the two. This correction highlights a recurring tension between how traditional media outlets frame complex financial regulatory issues and the precise legal definitions, particularly within the nascent and often misunderstood cryptocurrency sector. Zhao's insistence on this distinction reflects a broader effort to ensure accurate reporting and public understanding of legal proceedings in the digital asset space.

In his social media response, CZ also shared an anecdote about a prior interaction with the Financial Times. He mentioned that the publication had initially sought a lunch interview with him, promising a positive narrative. However, this meeting was subsequently canceled. Zhao expressed his regret over the situation, subtly implying that the eventual article did not align with the positive coverage he had been led to expect. This personal insight offers a glimpse into the dynamic and often fraught relationship between high-profile figures in the tech and finance sectors and mainstream media, where expectations of narrative control can clash with journalistic interpretations.

The controversy surrounding YZi Labs and CZ's forceful response underscores several critical aspects of the current landscape in Web3 and AI. Firstly, it highlights the intense scrutiny that prominent figures and their new ventures attract, especially those with a history in the highly regulated and often controversial cryptocurrency space. Secondly, it brings to light the challenges of accurate reporting and the potential for miscommunication or misinterpretation when dealing with complex financial instruments and emerging technologies. For entrepreneurs like CZ, managing public perception and correcting what they view as factual inaccuracies becomes a paramount concern, particularly when dealing with established media outlets. The incident serves as a reminder of the ongoing dialogue required between innovators, regulators, and the media to foster a clearer understanding of the rapidly evolving digital economy. Ultimately, the divergent accounts from the Financial Times and CZ emphasize the importance of due diligence and critical assessment of information in the fast-paced world of digital finance and technology.