Malaysia’s SC cracksdown Bybit for illegal operations

The Securities Commission of Malaysia has asked Bybit and its chief executive officer to cease operating all digital platforms in Malaysia and also stop all advertisements targeting Malaysian audiences.

The CS published in its press release stating that it has initiated enforcement proceedings against Bybit, a cryptocurrency exchange, and its business manager, Ben Zhoufor providing a cryptocurrency sales platform without proper registration on December 27. The platform had been ordered to cease all digital platforms operating in Malaysia from December 11, within 14 working days. This also includes Bybit’s website and mobile apps. The company must also stop advertising to Malaysian investors and deactivate its local Telegram support group.

The SC expressed apprehensions regarding Bybit’s compliance with regulatory obligations and investor protection. The regulator said offering businesses digital asset exchange without obtaining SC-recognized market operator registration constitutes an offense under Section 7(1) of the Markets Act, 2007 and capital services. Bybit and Zhou have already been included in the SC’s Investor Alert List for similar regulatory infractions since July 2021.

Bybit complied with the application instructions, SC reiterated. However, it also warned Malaysian investors that trading on unregistered platforms means they are not protected by Malaysia’s securities laws, making them more vulnerable to financial crimes. There are now only six registered crypto exchanges that can legally operate in Malaysia: HATA Digital Sdn Bhd, Luno Malaysia Sdn Bhd, MX Global Sdn Bhd, SINEGY DAX Sdn Bhd, Tokenize Technology Sdn Bhd and Torum International Sdn Bhd.

Bybit confirmed the enforcement action on its Malaysian Telegram channel, saying it realizes it could cause inconvenience. The exchange also noted that there was hope of reconnecting with Malaysian investors in the future if and when they obtain the necessary licenses.

“We understand that this may cause some inconvenience. Once we have obtained the appropriate licenses, we look forward to contacting you again in the future.“

Malaysian telegram message from ByBit

This is the second European country where Bybit’s operations have been affected recently. In August, Bybit left the French market after the country implemented stricter licensing requirements in anticipation of European Union markets in Cryptoassets regulations. This has resulted in non-compliance risk for Bybit in several jurisdictions, underscoring the regulatory scrutiny crypto exchanges have been receiving in recent times.