CZ Demands Third-Party Custody for DAT Firms After QMMM's Dramatic Collapse

QMMM Scandal: From 960% Surge to Offshore Flight

QMMM Holdings, a Nasdaq-listed firm dubbed the “first runaway MicroStrategy,” announced a $100 million crypto reserve plan in September 2025, sparking a 960% stock rally to $303 intraday before a catastrophic crash to $0.54. The SEC halted trading from September 29 to October 10 amid manipulation probes, with Nasdaq suspending it on October 11; executives, including CEO KWAI Bun—a former Hong Kong TV personality—allegedly abandoned the Hong Kong office, leaving investors in limbo after a $8.6 million 2024 IPO. This pump-and-dump, tied to unverified Bitcoin, Ethereum, and Solana buys, exposed vulnerabilities in Digital Asset Treasury (DAT) models, where firms hoard crypto to boost valuations, echoing MicroStrategy’s playbook but without transparency.

CZ’s Call for Mandatory Safeguards in BNB Ecosystem

Binance founder Changpeng Zhao (CZ) responded forcefully on October 17, 2025, advocating mandatory third-party custody and investor-audited accounts for all DAT firms to curb fraud and restore trust. “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 stated, tying it to his venture arm’s standards. Amid BNB Chain’s $5.2 billion TVL, this push targets manipulation risks in crypto-treasury plays, urging real-time audits and secure custody to prevent “speculative imitation” from eroding institutional confidence. Gate.io’s Web3 wallet, supporting BNB custody, aligns seamlessly for users seeking compliant storage amid rising SEO queries on “DAT transparency 2025.”

Broader Debate on DAT Accountability

The QMMM fallout reignites scrutiny of over 300 DATs emulating MicroStrategy’s $15 billion Bitcoin bet, with critics decrying opaque reserves fueling stock hype. CZ’s proposal emphasizes offshore safeguards, drawing parallels to post-FTX reforms, while SEC probes signal tougher U.S. oversight. For Gate.io traders, this could boost demand for audited BNB projects, enhancing liquidity in futures and spot pairs.

Implications for Crypto Markets and Gate Strategies

QMMM’s implosion, erasing 99% of peak value, warns of DAT hype cycles amid 2025’s volatility—Bitcoin’s 2.3% dip to $108,800 amplifies risks. CZ’s standards may stabilize BNB ecosystems, fostering 20-30% inflows to compliant firms.