During the 2026 Hong Kong Web3 Carnival, He Yi disclosed in a private KOL meeting that YZi Labs has committed capital to a leading Chinese AI large model company, though the specific entity remains unnamed. This revelation triggered immediate speculation within crypto and AI sectors, with market focus converging on Kimi, a subsidiary of Moon's Dark Side. The theory gained traction from CZ's prior public endorsement of Kimi AI's token efficiency and coding performance, alongside documented interactions between YZi Labs' former investment partners and the Kimi team. He Yi subsequently clarified on the X platform that the investment targets an AI company founded by Chinese entrepreneurs, neither confirming nor denying the specific identity of the recipient.

This strategic move coincides with a paradigm shift in the global AI landscape, where Chinese models are displacing US counterparts in developer adoption. Data compiled by Woofun AI shows that on the OpenRouter platform, Chinese models surpassed American models in user traffic by February 2026, securing three of the top five positions. Silicon Valley investor Chamath Palihapitiya publicly validated this trend, noting that migrating workloads to Chinese models delivered superior performance at significantly lower costs compared to OpenAI and Anthropic. Independent evaluations across five dimensions, including Hugging Face download volume and LMSYS blind testing, confirm that Chinese models now dominate the global open-source large model TOP 10, leading in Chinese language processing, reasoning, programming, and multimodal capabilities.

Specific market leaders have carved out distinct competitive advantages. DeepSeek is recognized as a "price butcher" for achieving top-tier performance at minimal cost, while Alibaba's Qwen series consistently tops usage charts for programming excellence. MiniMax has captured over 70% of its revenue from overseas markets through agent scenarios, and Zhizhu AI's GLM series has entrenched itself in enterprise deployments. Moon's Dark Side's Kimi series differentiates itself through long-context handling and agent coordination. These technological breakthroughs have rapidly translated into capital market valuations, with Zhizhu AI and MiniMax listing on the Hong Kong Stock Exchange in January 2026. Zhizhu AI's stock surged over 40% on its debut day, briefly exceeding a market value of HKD 300 billion, while MiniMax reached a valuation of USD 28.5 billion.

Primary market activity reflects this intense capital competition. Moon's Dark Side completed a USD 500 million financing round in late 2025 at a USD 4.3 billion valuation, followed by a USD 700 million round in February 2026 that raised its valuation to USD 10 billion with participation from Alibaba and Tencent. The company is currently seeking up to USD 1 billion in new funding, targeting a post-money valuation of approximately USD 18 billion.

Concurrently, DeepSeek is in advanced talks with Tencent and Alibaba for a combined USD 1.8 billion investment, aiming for a valuation near USD 20 billion. Woofun AI notes that this influx of diverse capital, ranging from domestic tech giants to state-owned enterprises, signals a maturing ecosystem where crypto capital is no longer sitting idly by.

YZi Labs has accelerated its AI investment strategy throughout 2025 and 2026, moving beyond infrastructure into application layers. In November 2025, the firm led an USD 11 million seed round for VideoTutor, an AI education agent, and invested in USD.AI, a hardware-supported infrastructure protocol. By January 2026, YZi Labs backed Genius, an on-chain trading terminal, and in March led a USD 52 million round for RoboForce, a physical AI robotics company where managing partner Ella Zhang joined the board. This progression from computing power and tools to foundational models indicates a comprehensive chess game designed to integrate AI deeply into the Binance ecosystem.

The strategic rationale for Binance involves leveraging its 300 million registered users, many of whom are developers and quantitative traders with urgent demand for advanced AI tools. Unlike current third-party integrations, a deep collaboration with a top large model could enable crypto-native capabilities such as interpreting on-chain data and executing complex agent trading strategies. Woofun AI analysis suggests that the massive real trading data generated by this user base would feed back into the model, creating a self-reinforcing closed-loop flywheel. Chinese models have already demonstrated superior competitiveness in real trading scenarios, as evidenced by the Alpha Arena competition initiated by Nof1.ai.

In the first season of Alpha Arena, six top models executed autonomous cryptocurrency perpetual contract trades on Hyperliquid with no human intervention. Qwen 3 Max emerged as the clear winner with a +22.3% return from only 43 trades in 17 days, while DeepSeek secured second place with a +4.89% return and the best Sharpe ratio. In stark contrast, American models suffered significant losses: GPT-5 lost 62.66%, Gemini lost 56.71%, and Grok 4 lost 45.3%. Although Grok 4.20 led the second season, DeepSeek V3.1 maintained a top-three position with a +7.3% return, and Kimi K2 made its debut, further validating the efficacy of Chinese models in the authentic battlefield of crypto trading.

For years, the crypto and AI sectors operated on parallel tracks, with the former focused on decentralization and the latter on computing power. YZi Labs' low-key investment represents a critical attempt to bridge this divide. As crypto capital shifts from chasing concepts to examining real data and performance, Chinese large model companies gain access to a global user network and Web3 developer ecosystem that traditional VCs cannot easily replicate. This convergence marks the beginning of a profound industry transformation where decentralized finance and artificial intelligence intelligence intersect to create new value paradigms.