I got Treasure Sand from the secret passage of the Tomb of Kings. no idea whats that for.
Treasure sand is just to weigh you down.
The mini-boss back there (something-the-thief) throws them at you during the fight so you get overloaded quickly and can't walk/run.
If you drop them, they can turn into side spawn (spectral armor, metallic mage, metallic warrior) and if you're overloaded and they drop on the ground, they can turn into side spawn. And if he throws the treasure sand at your pets, they drop to the ground and can turn into side spawn.
But in the grand scheme of things, that's all that treasure sand is, an inconvenience.