HuobiGlobal Ordered to Cease Operations by Malaysian Regulators

Updated: 22 May 2023

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The Securities Commission Malaysia (SC), has ordered HuobiGlobal, a popular cryptocurrency exchange, to cease its operations in Malaysia. The SC took action against Huobi and its CEO, Leon Li, for running an unregistered digital asset exchange (DAX) in Malaysia, which is in violation of local regulatory requirements. The decision aims to protect investors’ interests and ensure compliance with securities laws.

? SC has issued a public reprimand against Huobi Global Limited to cease operations in Malaysia, disable website and mobile app on platforms like Apple Store and Google Play.

? Read the full release here: https://t.co/UY4dVGAHRh pic.twitter.com/Fe6xSqftZr

— SC Malaysia (@SecComMalaysia) May 22, 2023

According to a statement from the Securities Commission Malaysia has issued a public reprimand against Huobi and its Chief Executive Leon Li for what they term “operating illegally in Malaysia.” As part of the enforcement action, Huobi also needs to disable its website and mobile application on platforms such as the Apple Store and Google Play. The warning alsp prohibits the exchange from circulating any advertisements via emails or social media platforms to Malaysian investors. C.E.O. Leon Li has been charged with the responsibility of ensuring that these directives are done.

Malaysian Investors Advised To Withdraw Funds and Cease Trading on Huobi

The SC emphasized the seriousness of the breach, highlighting that operating a DAX without proper registration as a Recognized Market Operator (RMO) is an offense under the Capital Markets and Services Act 2007. Malaysian investors who have been using Huobi are strongly urged to cease trading, withdraw their investments, and close their accounts.

“The SC views this breach seriously, as operating a DAX without obtaining the SC’s registration as a Recognized Market Operator (RMO) is an offense under Section 7(1) of the Capital Markets and Services Act 2007,” the SC said in the statement.

“The SC urges Malaysian investors who have been using Huobi to immediately cease trading through its platform, withdraw all their investments, and close their accounts,” it said.

Securities Commission Malaysia Urges Investors to Avoid Unregistered Crypto Platforms

The SC advised investors to engage only with RMOs that are registered with the Commission, as they have undergone rigorous regulatory scrutiny and adhere to strict guidelines to protect investors under Malaysia’s securities laws. Dealing with unlicensed or unregistered entities or individuals exposes investors to risks such as fraud and lacks the protection provided by the country’s securities laws.

Additionally, the SC advised investors to exercise caution when selecting investment platforms. Investors should conduct thorough due diligence before making any investment decisions. They were also warned to be wary of investment schemes that promise high returns with little risk. By taking these precautions, investors can safeguard their investments and avoid falling victim to fraudulent schemes, the SC emphasized.

The action taken against Huobi by the SC follows the regulator’s previous warnings to the exchange regarding its operation without registration. In August of the previous year, Huobi was added to the Investor Alert List, and Malaysian investors were advised not to engage with the platform until it received approval from the SC. Huobi had previously stated that it was in discussions with regulators in Malaysia regarding its presence in the local market.

With this enforcement action, the Malaysian Securities Commission aims to protect investors’ interests. It also seeks to ensure that digital asset exchanges operate in compliance with regulatory requirements. The cessation of operations for Huobi in Malaysia serves as a reminder to other cryptocurrency exchanges to adhere to the necessary legal and regulatory frameworks when operating in the country.