The Securities Commission (SC) of Malaysia has ordered Huobi, a cryptocurrency exchange, to stop operating in the country for failing to register as a digital asset exchange (DAX). As per the Capital Markets and Services Act 2007, all exchanges must obtain licensing from Malaysia’s SC as a Recognised Market Operator (RMO), and Huobi’s failure to do so was deemed a severe infraction.
Directives
Huobi has been directed to remove its website and mobile application from several platforms, including Apple Store and Google Play. The exchange has also been instructed to cease circulating or publishing any advertisements through email or social media platforms to Malaysian investors. The SC has advised Malaysia-based investors to withdraw all their assets from the platform and immediately close their accounts, as their continued usage of the exchange could expose them to fraud, and local laws may be unable to protect them. Huobi CEO Leon Li has been ordered to ensure that the directives are carried out.
Implications
This order comes at a time when Huobi is trying to regain its market footing after losing a significant share of its market dominance to rivals, following the closure of its Chinese operations in 2021. Huobi founder and CEO Leon Li sold his controlling stake in the crypto exchange to Hong Kong-based asset managers About Capital last October, stating that the deal would enable the company to accelerate its globalization plans, including business expansion initiatives. Despite reports indicating that Li would depart from the company altogether, he continues to hold the CEO position, according to his LinkedIn profile.
Huobi’s failure to obtain licensing from Malaysia’s SC as a Recognised Market Operator (RMO) has resulted in the exchange being ordered to cease its operations in the country. The SC has advised Malaysia-based investors to withdraw all their assets from the platform and immediately close their accounts due to the risk of fraud and the inability of local laws to protect them. This order is a significant setback for Huobi, which is already struggling to regain its market share after the closure of its Chinese operations in 2021. It remains to be seen how this will impact the exchange’s plans for global expansion.
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