Malaysia slaps CEO CZ with regulatory order to stop Binance operations

abdelaziz Fathi

Binance, the world’s largest cryptocurrency exchange platform, has been slapped with an enforcement action by Malaysia’s Securities Commission Malaysia (SC) and was ordered to stop operating in the country.

Malaysian regulator said Binance has continued to operate illegally in Malaysia despite being included in the SC’s caution list back in July 2020. The alert list includes persons or entities that carry on regulated activities or those providing services as a market maker without proper approval, authorisation or recognition.

The legal notice specifically names Binance’s brands registered in the Cayman Islands, Lithuania, the UK, and Singapore. The exchange CEO Zhao Changpeng (CZ) was also mentioned by name to ensure that the SC’s directives are carried out.

Anyone who engages in regulated activities without a valid license or registration from the SC is committing an offence under the Capital Markets and Services Act 2007. If convicted, they may be punished with imprisonment of up to ten years and fined.

As per the SC’s alert, Binance entities must disable Malaysians’ access to its website (www.binance.com), mobile applications and Telegram group within 14 business days. The influential exchange was also ordered to immediately cease all media and marketing activities.

The watchdog also noted that Binance’s P2P platform allows users to buy cryptocurrencies using Malaysian ringgit though it lacks the license to operate a fiat-to-crypto gateway.

“Accordingly, the SC has issued a public reprimand against Binance for continuing to operate illegally in Malaysia despite being included in the SC’s Investor Alert List in July 2020. In this regard, the public reprimand was issued against Binance Holdings Limited (Registered in the Cayman Islands), its CEO Zhao Changpeng, as well as three other Binance entities, namely Binance Digital Limited (Registered in the UK), Binance UAB (Registered in Lithuania) and Binance Asia Services Pte Ltd (Registered in Singapore),” the watchdog further explains.

It is not clear whether Binance will stop offering its services to Malaysian users, nor does it intend to do so. The exchange declined to comment when reached.

Previous run-ins with regulators

The southeast Asian regulator had repeatedly issued warnings against crypto exchanges and online brokers for breaking its securities laws.

Malaysian law requires cryptocurrency exchanges to register as Digital Assets Exchanges with the SC. Following a nine-month-long probationary period, successful applicants would be eligible to receive full approval from the local securities watchdog.

Binance is facing a growing crackdown on multiple fronts and has been flagged by regulators in other jurisdictions before. Most recently, Britain’s Financial Conduct Authority (FCA) restricted the exchange from carrying out regulated activities in the country.

Elsewhere, Brazil’s financial markets regulator, the Securities and Exchange Commission (CVM), barred the exchange from offering Bitcoin futures contracts in the country.

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