The statement conveyed by Malaysia securities watchdog on Monday, May 22, directed Huobi crypto exchange to terminate operations in the country. The Securities Commission (SC) statement directed Huobi to disable the web-based platform alongside Apple and Play stores applications.
Huobi Ordered to Cease Operations
The leading securities regulator in the country declared that the Seychelles-based crypto exchange should cease operations, citing noncompliance concerns. In a move replicating the enforcement action undertaken by the US Securities and Exchange Commission, SC cited similar concerns in the order.
The directive illustrates that Huobi fell foul of the regulators in the Southeast Asian country for running a digital asset exchange platform without fulfillment of requisite registration. In particular, the announcement blamed the Huobi executives for their continued defiance of Malaysian regulations.
Huobi Violated Capital Markets and Services Act
SC alleged that Huobi sustained a violation of the Capital Markets and Services Act (2007) by operating a crypto exchange platform without obtaining the Recognized Market Operator (RMO) license.
SC issued a public reprimand targeting Huobi chief executive Leon Li. The regulator instructed the chief executive to oversee the immediate shutdown of local operations. The firm would also cease communications with Malaysian investors.
SC reiterated the need for all crypto firms to comply with the local regulatory requirements. The announcement emphasized that SC would not hesitate to crack the whip on violations to safeguard investors’ interests. Such reflects the directive demanding immediate withdrawal of the Huobi app from the Apple and Google Play stores.
Securities Commission Allege Huobi Operated Without License
SC directed the Seychelles-based crypto exchange to cease all advertising activities for products and services. Also, the firm should not direct such advertisements by email or social media.
SC observed that Huobi failed to obtain the requisite registration, thus directing Malaysian investors to halt further trading on the Huobi platform. Additionally, the investors should withdraw funds deposited to Huobi and ensure immediate closure of the accounts.
A review of Huobi’s journey in Malaysia indicates the Global unit rebranded in November 2022. The rebrand occurred days after the About Capital Buyout Fund acquired the unit in October 2022.
The news of enforcement action prompted a reaction from the company’s spokesperson indicating the SC order targeted Huobi before the change of ownership. The executive ruled out the directive as not relating to the Huobi operating following the change in ownership.
The executive added that the order conveys action to the previous Huobi exchange and its shareholders. He distanced the action from the current Huobi platform that strictly adhered to Malaysian regulations.
Huobi Global has in the past encountered crosshairs with the country’s regulator. The first encounter arose in August 2022 when the regulator issued an investor alert declaring the exchange operating without fulfilling the registration requirements.
The announcement prompted Huobi to enter into discussions with the Malaysian regulators seeking clarity on its regional operations. The crypto exchange confirmed launching Huobi Labuan as a brokerage platform in November 2020. It targeted temporarily offering crypto spot and derivative trading in nine months.
Will Huobi Emulate Binance and Return to Malaysia?
The Monday announcement by SC to shut down Huobi operations rekindled the mid-2021 events when the regulator ordered the closure of Binance operations. Then, the regulator indicated that Binance should cease operations as it did not obtain the necessary regulatory approval.
Huobi could deploy a similar approach as Binance’s to return to Kuala Lumpur in 2022 by acquiring a local player. Binance secured a return to the Malaysian market when it bought a stake in MX Global. The acquired firm is a regulated trading platform and, thus, has a Regulated Market Operators license.
An SC dashboard review, updated last August 2022, indicates that only four companies have fulfilled the regulatory requirements. Consequently, only four crypto firms are licensed operators, including MX Global. Tokenize Technology, Sinegy, and Luno Malaysia.
It is prudent to wait for Huobi’s response to the SC announcement. Also, About Capital is yet to state the matter. The primary question is whether Huobi will replicate Binance’s move for its return.
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