CZ Calls for Custodial Audits for All DAT Companies Amid QMMM “Runaway” Scandal

Binance founder Changpeng Zhao (CZ) has called for stricter safeguards in the Digital Asset Treasury (DAT) sector. His Remarks follow the alleged collapse of QMMM, a US-listed firm accused of market manipulation and fleeing its Hong Kong office.

The scandal, widely described as the first “runaway Microstrategy”, has sparked renewed debate about transparency and accountability among publicly traded companies investing heavily in crypto reserves.

CZ Demands Custodial Oversight for DAT Firms

In a post on X (Twitter), CZ said all DAT companies must use third-party crypto custodians and have their account setups audited by investors.

He added that this would now be a mandatory requirement for any YZi Labs investment in BNB-affiliated DAT projects.

“All DAT companies should use 3rd party crypto custodians with account setup audited by investors. This is a prerequisite for YZi Labs investments in BNB DATs,” CZ wrote.

Changpeng Zhao’s remarks come after QMMM’s meteoric and suspicious rise. The US-listed firm announced in September plans to invest $100 million to build reserves in Bitcoin (BTC), Ethereum (ETH), and Solana (SOL).

“As part of this initiative, QMMM is establishing a diversified cryptocurrency treasury, initially focusing on Bitcoin, Ethereum, and Solana. The treasury is expected to scale to an impressive $100 million,” read an excerpt in the announcement.  

Following the announcement, the company’s stock surged by over 960%. Within days, however, the SEC accused the company of manipulating stock prices via social media.

Soon after, reports from Caixin revealed that QMMM’s Hong Kong office in Seaview Building had been vacated. This prompted fears that the company’s executives had absconded.

“They Pumped the Headlines and Dumped the Truth”

The crypto community has reacted sharply to what many now call a textbook case of speculative deception.

Another pseudonymous account on X, The Master Builder, added a more philosophical take, indicating that QMMM pumped the headlines and dumped the truth. According to the user, the headlines were a bait trap.

Further investigations revealed that QMMM’s founder and CEO, KWAI Bun, a Hong Kong native and former TV personality, had previously participated in a singing competition before pivoting into crypto finance.

QMMM’s founder and CEO, KWAI Bun. Source: Lin on X

Records show QMMM went public in 2024 at $4 per share, raising $8.6 million. The price later spiked to $303 intraday, a 560-fold increase, before collapsing to $0.54.

The SEC halted trading after uncovering artificially inflated volumes and possible Reddit-driven hype manipulation.

SEC Halted QMMM Trading. Source: Yahoo Finance

Industry Reaction and Lessons Ahead

Industry analysts have labeled QMMM a cautionary tale of retail hype and unchecked leverage, echoing early 2021’s meme-stock phenomena.

CZ’s intervention signals an emerging push for accountability within the BNB ecosystem and the wider DAT space, where companies manage digital assets as part of their treasury strategies.

By demanding third-party custodianship and investor-audited accounts, CZ aims to prevent fraudulent schemes from undermining institutional trust in crypto-linked corporate reserves.

As the QMMM fallout deepens, the incident mirrors a growing divide between genuine corporate crypto adoption and speculative imitation. Perhaps, discernment remains the ultimate hedge, especially during bull markets.