• As Malaysia orders the crypto exchange Binance to halt operations, the company finds itself in deep water

  • Binance, a cryptocurrency exchange, has had a rocky time recently, as they have been the target of many regulatory measures. Malaysia has just delivered the most recent blow.

    The Malaysian Securities Commission (SC) has taken enforcement action against Binance for illegally operating a digital assets exchange (DAX) in the nation, thereby prohibiting the cryptocurrency exchange from serving Malaysians.

    From July 26, 2021, Binance will have 14 business days to disable the Binance website (www.binance.com) and mobile applications in Malaysia; immediately cease all media and marketing activities, including circulating, publishing, or sending any advertisements and/or other marketing material, whether via emails or otherwise, to Malaysian investors; and immediately restrict Malaysian investment. Zhao Changpeng, Binance’s CEO, “has also been specifically directed to guarantee that the foregoing directions are carried out,” according to the statement.

    The enforcement action applied to Binance Holdings Limited (Registered in the Cayman Islands) and all entities related to it, including its CEO Zhao Changpeng, Binance Digital Limited (Registered in the United Kingdom), Binance UAB (Registered in Lithuania), and Binance Asia Services Pte Ltd, according to the announcement on the SC’s website (Registered in Singapore). In July 2020, the regulatory body issued an investor alert list that included Binance as one of the entities consumers should avoid because they had failed to register with the regulatory body under Sections 7(1) and 34(1) of the Malaysian Capital Markets and Services Act 2007, and the regulatory body currently claims Binance has not complied.

    The SC issued a strong warning to Binance users to close their accounts with the exchange to its residents. “It is strongly urged that investors refrain from dealing with or investing in illicit DAX. Those who presently have accounts with Binance are strongly advised to stop trading on its platforms immediately and withdraw all of their funds,” the notification states.

    The enforcement action comes at a time when Binance is dealing with similar issues in other countries and is attempting to stay in compliance with regulators. The exchange also stated today that it is discontinuing its futures and derivatives products in Germany, Italy, and the Netherlands, effective immediately. According to the notice, a 90-day countdown will begin for customers from the nations to close their futures and derivatives holdings at a yet-to-be-determined date.

    Several crypto experts have been wary of the situation brewing with Binance for some time. While regulators have focused their attention on Binance, the largest cryptocurrency exchange in the world, smaller exchanges are not immune. Other exchanges, including the Hong Kong-based FTX, have recently taken moves to improve their regulatory compliance.

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