On Monday, the Malaysian Securities Commission (SC), ordered one of the world’s largest crypto exchanges to cease operations. The regulator has clamped down on the exchange saying it violated the laws to operate in the country.
In the announcement released by the SC, it ordered Huobi Global Limited to wind down operations in the country as it had been operating its crypto exchange without registration. The SC took action against both Huobi and its CEO Leon Li for operating illegally in Malaysia.
The regulator said that the exchange failed to comply with the local regulatory rules and explained that operating a digital asset exchange without being registered is an offense under section 7(1) of the Capital Markets and Services Act 2007. Quoting the agency:
This decision comes after concerns about the platform’s compliance with local regulatory requirements and protecting investors’ interests.
Furthermore, the SC urged Huobi’s Malaysian users to withdraw all their investments from the platform and close their accounts. It said Huobi must disable its website and mobile apps in the country as well as cease any advertisements to Malaysian investors. It added:
Leon Li, as the CEO, has also been specifically ordered to ensure that the above directives are carried out.
Founded in 2013, Huobi is counted as the fourth largest crypto exchange in the world by trading volumes. After the SC’s order, Justin Sun, founder of Tron and “advisor” to Huobi, told the media that Huobi currently does not operate in Malaysia. He added that Leon isn’t the CEO of Huobi and the company currently doesn’t have a CEO role.
Talking about the enforcement action, Sun explained that the notice doesn’t address the executive current board. He also clarified that they are ”committed to providing a safe, secure, and compliant trading environment for users worldwide.” Quoting him:
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.
Reportedly, in October last year, Huobi announced that “the controlling shareholder” of the company had agreed to sell its stake to Hong Kong-based investment company About Capital Management’s M&A fund. While Huobi has not yet explicitly stated the controlling shareholder, the news claimed Leon was seeking a buyer for his nearly 60% stake in the company and was asking for at least $1 billion.
To this, some reports claimed that Sun, who clearly has a significant role in the exchange, was the real buyer of the exchange, but he continues to deny this. The SC enforcement action comes as Sun aims to revitalize Huobi by listing memecoins.
Sun recently also accused Li’s younger brother Li Wei of receiving millions of free Huobi (HT) tokens and profiting $7.45 million in the process. Sun wants Wei to return the profit and wants to destroy his remaining tokens as he has no role to play in Huobi’s development. While Huobi is counted as one of the biggest crypto exchanges across the globe, this is not the first time national authorities have pointed fingers at the exchange.
In November last year, the Uzbek government blocked many significant international cryptocurrency exchanges because they lacked the necessary authorization to provide trading services in cryptocurrencies. One of such exchanges was Huobi who got affected by the government’s decision.