The emergence of noncompliance concerns necessitated Malaysia’s Securities Commission to direct Huobi’s termination of local operations.
Noncompliance Prompts Termination of Operating License From Securities Commission
Today, Malaysia’s Securities Commission (SC) has called for Huobi, a Seychelles-founded crypto exchange, to close operations nationwide. This announcement is a clear indicator of Huobi having trouble with regulators in Malaysia owing to the lack of registration to operate a digital asset exchange. Under the Capital Markets and Services Act 2007, operating a crypto exchange in the absence of a Recognized Market Operator is illegal.
The exchange and founder Leon Li also had a public warning against them. Being the organization’s chief executive, Leon is now tasked with supervising activities such as the local operations’ shutdown, stopping links with Malaysian investors, deactivating the exchange’s website, and removing the application from app stores.
According to the regulator, concerns regarding the adherence of the platform to local regulatory requirements and the need to safeguard investors’ interests evoked the need to execute this action. Despite contacting Huobi and SC for additional comments, feedback still needs to be attained.
Malaysia’s Initial Steps to Eliminate Illegal Crypto Operations
It is impossible to link Malaysia to the worldwide crypto arms race. This situation is depicted by this nation’s lack of crypto news. However, this is likely to change.
In September 2021, the country’s central bank participated in a trial with the Bank for International Settlements. Later, in January, the bank revealed that it was creating a sample to enhance its policy and technical competencies.
This concept would particularly be helpful if the need to provide a Central Bank Digital Currency (CBDC) arises. It is a centrally-provided digital asset that acquires value from a country’s legal tender.
Back in March, Zahidi Zainul, the country’s Deputy Minister of Communications and Multimedia, highlighted the need for the nation to consider Bitcoin as a legal tender. When replying to concerns by the opposition, he told Parliament the government needs to permit the implementation of this idea.
Malaysia Crackdown on Unregistered Crypto Exchange
The Malaysian police confirmed executing multiple arrests following the raid on suspected illegal operations in the USDT-powered crypto platform. The Law enforcement officers confirmed arresting 40 individuals.
The officers indicated the raid became necessary as the exchange allegedly facilitated Mainland Chinese citizens’ trade of USDT for fiat currency.
The raid news appeared first in a publication of Oriental Daily, a local Malaysian media outlet. The bust of the unregistered crypto exchange involved joint efforts from the National Financial Crime Center and the crime investigation team.
Officers confirmed dismantling of the exchange platform, also suspected of executing illegal online gambling. Confirming the arrest, the detectives indicated that the platform systematically converted money received from Mainland clients into USDT.
The enforcement officers alleged that the USDT-powered crypto exchange would transfer the tokens to the recipients in China.
The officers confirmed collecting numerous evidence that the group secretly ran crypto exchange operations without authorization from the Malaysian regulators.
Citing the shutdown of Huobi, the officers reiterated that all crypto service providers must register operations as stipulated by Malaysian law. The regulators promised to sustain the crackdown to weed out crypto exchanges without permits.