The Securities Commission Malaysia (SC) has ordered Huobi Global and its chief executive, Leon Li, against operating in the country after it failed to obtain registration with the regulator.
In a media release, the SC announced an additional order against the exchange to disable its website and remove access to its mobile application for residents. The enforcement action will see Huobi halt the publishing of advertisements to investors on social media or email with immediate effect.
The orders were accompanied by a public advisory that urged Malaysian investors to halt trading and withdraw their funds from the platform. The SC also noted that Malaysian investors on Huobi have zero protection under the law in the event of a black swan event.
Huobi Global is accused of breaching Section 7(1) of the Capital Markets and Services Act 2007 by offering exchange services without seeking registration as a Recognized Market Operator (RMO).
“Registered RMOs have undergone strict regulatory scrutiny and are required to adhere to strict guidelines so that investors are protected under Malaysia’s securities laws,” read the warning. “Those who invest with unlicensed or unregistered entities or individuals are exposed to risks such as fraud and may not be protected under Malaysian securities laws.”
In a short statement, Huobi advisor Justin Sun says Huobi does not operate in Malaysia, noting that the regulator was working with the wrong facts. Sun clarified that the new iteration of the digital asset exchange operates without the position of a CEO and has no association with its previous entity.
“In response to recent reports, we would like to clarify that the situation outlined pertains to the previous Huobi entity and former shareholders,” said Sun. “This is not associated with the current Huobi platform, which adheres to strict regulatory compliance globally.”
Not the best of times for Huobi
Despite its perch as the fourth largest exchange in terms of daily transaction volume, Huobi has been grappling with several issues in recent month, including the reduction of employee headcount at the start of the year amid its fiasco with the PI network.
Early in the year, widespread reports showed Huobi had scrapped end-of-year bonuses as it reeled from the shock of falling digital asset prices. Pundits claim that Huobi’s rough financial patch stemmed from China banning digital currencies, a move that led to the loss of over 1 million Chinese customers.
Watch: What’s next for digital asset exchanges & investment?
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