Huobi Falls Foul of Malaysian Regulator
Malaysia’s Securities Commission, the regulator responsible for investor protection and market integrity in the South East Asian country, has closed down the Malaysian operations of Seychelles-headquartered global crypto exchange Huobi.
The regulator announced the shutdown via a press release published to its website on Monday. The Commission outlined that it has taken action against both the exchange, Huobi Global Limited, and its CEO Leon Li. It cites “operating illegally in Malaysia,” given that it was operating as an unregistered digital asset exchange (DAX) as the rationale for the decision.
With the enforcement action has come an order to Huobi from the regulator to “cease circulating, publishing or sending any advertisements, whether in email or on social media platforms, to Malaysian investors, and to stop its operations in the country, including to disable its website and mobile application on several platforms such as Apple Store, Google Play and any other digital application platform.”
Compliance concerns
The Securities Commission is putting the onus on the Huobi Global CEO to ensure that this order is complied with. The regulator said that it had concerns about the platform’s compliance with local regulatory requirements. It further outlined that it is an offense in Malaysia to operate a DAX without having completed registration with the Commission as a Recognized Market Operator (RMO) under Section 7 (1) of the Capital Markets and Services Act 2007.
The Malaysian regulator also took the opportunity to warn citizens that they should only seek to trade on platforms that are registered RMOs and that for right now, those that have funds on the Huobi platform should withdraw their assets and cease trading on the platform.
Expected news
Huobi doesn’t seem to have made an official statement relative to the Malaysian Security Commission’s decision via its official media channels. However, it did provide the following response to CoinTelegraph on Monday:
“In response to recent reports, we would like to clarify that the situation outlined pertains to the previous Huobi entity and former shareholders. This is not associated with the current Huobi platform, which adheres to strict regulatory compliance globally.”
Taking that response at face value, the company doesn’t seem to be particularly bothered about the enforcement action. It seems as if Huobi were already prepared for this eventuality, by starting a new corporate entity from scratch.
In August 2022, the Malaysian regulator issued Huobi Global with a lesser enforcement action by adding the company to its investor alert list. It chastised the firm for operating without regulatory approval.
Malaysia hasn’t been a hotbed of activity where crypto and digital assets have been concerned and certainly doesn’t compare with Asian centers like Hong Kong and Singapore who are actively chasing crypto business. However, in March of last year, the country’s Deputy Minister of Communications and Multimedia, Zahidi Zainul, said that the Southeast Asian country should recognize crypto assets like Bitcoin as legal tender.
In 2021, Malaysia’s central bank joined a Bank of International Settlements (BIS)-led trial to explore the proof of concept of a central bank digital currency (CBDC), in order to enhance technical and policy capabilities should there ever be a need to issue one.
