Changpeng “CZ” Zhao has mandated that all BNB-based digital asset treasuries seeking investment from YZi Labs must now use verified third-party custodians, a decision aimed at enhancing transparency and security after a major fraud scandal.
The new policy requires external custodians to manage assets, with accounts subject to investor audits. This measure aims to prevent fraud and restore confidence in the burgeoning digital asset treasury sector.
The decision comes in the wake of the collapse of QMMM, a publicly traded crypto treasury firm accused of orchestrating a significant fraud and manipulating its stock price.
Zhao explicitly stated on social media platform X, “All DAT companies must use third-party crypto custodians, with accounts audited by investors. It is a prerequisite for any investment from YZi Labs in BNB DATs.”
U.S. financial regulators, including the Securities and Exchange Commission (SEC), accused QMMM of manipulating its share price. The company allegedly used social media campaigns to inflate its stock value, which surged nearly tenfold after announcing plans to invest $100 million in Bitcoin, Ethereum, and Solana.
Asian media later reported that QMMM’s offices in Hong Kong were found empty. This fueled suspicions that the firm’s executives had absconded with investor funds.
Third-party custodians serve as critical intermediaries, safeguarding corporate and investor assets. They significantly reduce the risk of internal teams diverting funds or losing control of digital wallets.
The mandate arrives as institutional interest in crypto treasuries grows. Investment bank China Renaissance Holdings, based in Beijing, is reportedly raising approximately $600 million for a new BNB-based treasury.
Sources familiar with the project indicate YZi Labs and China Renaissance will contribute around $200 million. China Renaissance is expected to cover about half of the initial capital.
Other companies, such as Applied DNA Sciences, have already raised up to $58 million for similar digital asset strategies. This highlights the increasing mainstream adoption of institutional crypto treasuries.
Zhao’s initiative underscores a push for greater accountability and transparency within the BNB ecosystem. It aims to mature the sector by aligning it with security standards comparable to traditional financial systems.