Since the beginning of the year, the number of publicly traded companies accumulating cryptocurrencies in their treasuries has simply exploded. This development model is currently facing a significant slowdown and perhaps even its very first rug pull.
QMMM Holdings: the rise and fall of a Digital Asset Treasury (DAT)
Originally, Digital Asset Treasuries (DATs) focused on accumulating Bitcoin in order to protect their treasuries from market volatility, while riding the wave of rising BTC prices. Then the euphoria that had been building since the beginning of the year shifted to the altcoin market, with more projects, but also more unstable ones. It must be said that the spectacular performance of the associated share prices when the implementation of such a strategy was simply announced was almost reason enough to take the plunge. This was the case, for example, for Nasdaq-listed company QMMM Holdings, which saw its share price rise by more than 1,000% in 24 hours.
The reason for this was the announcement on September 9 of a planned $100 million fundraising to “establish a diversified cryptocurrency treasury initially targeting Bitcoin, Ethereum, and Solana (SOL).” This is a prime example of a zombie company seeking stock market visibility, which will quickly come to an end.
Why does this chart stop on September 26? Simply because on that date, the U.S. Securities and Exchange Commission (SEC) launched an investigation into the company on suspicion of “potential manipulation of QMMM securities through recommendations made to investors by unknown individuals on social media,” apparently intended to implement a pump and dump strategy.
The first rug pull by crypto treasury companies?
The SEC’s investigation quickly revealed that the offices of QMMM Holdings, supposedly located in a business building in Hong Kong, were completely empty. The only trace of its existence was a registered office in the tax haven of the Cayman Islands. Was this confirmation of a premeditated scam?
In the wake of this, the Nasdaq decided to suspend trading of its shares on October 11. This is an opportunity to recall that this key American stock exchange had announced its intention to strengthen the supervision of Digital Asset Treasuries (DAT) in early September, in particular by imposing stricter consideration of shareholder opinions.
Faced with this complex situation, the founder of Binance was quick to intervene on the X network. Changpeng Zhao (CZ) is clearly taking advantage of this affair to try to reassure BNB Treasuries investors, stating that “all DAT companies should use third-party cryptocurrency custodians with an account configuration audited by investors.”
This is a “prerequisite” for any investment by his company, YZi Labs, in this type of company. This is particularly important in light of what could quickly turn out to be the industry’s first rug pull…
