This item is technically a quest item one obtains while working on an Alliance which begins in Winterspring. After gathering a number of items from across the world, this item is given to you, which you are ultimately supposed to turn in to Fandral Staghelm in Darnassus for your final reward.
This item used to be an equip-able trinket that would slowly kill you if equiped. As such, many people decided to hold onto this item instead of finishing the quest string. This was because of the special properties this item has for those who kept it.
Crystal of Zin-Malor was equipable. However, if you did equip it, because you were considered "unworthy" by the stone, it would drain both your mana and your health over time until you either unequiped it or died. When you died, though, your armor took no damage. If one held onto the stone, it could be used as an additional device for getting past certain locked doors without their respective keys, or could be used to commit "suicide" so that you could talk to ghost NPCs, such as Franclorn Forgewright in Blackrock Mountain for the Shadowforge Key quest. It could also be used to kill oneself if you happened to get stuck and one's hearthstone is on cooldown, so that you can be sent to the nearest graveyard from wherever you were located. The trinket also did not suffer a cooldown, so it could be repeatedly used as soon as one has come back to life.
It was limited to the Alliance only.
Patch 3.1.0 (14-Apr-2009): This item was changed from an equipable trinket to a non-equipable item