Malaysia Cracks Down on Unregistered Crypto Exchange Bybit

The Securities Commission of Malaysia (SC) has taken enforcement action against cryptocurrency exchange Bybit and its CEO, Ben Zhou, for operating a digital asset trading platform without proper registration. This decision aims to safeguard investor interests and regulate the rapidly growing crypto market. Bybit has been ordered to suspend all its online services in Malaysia, including its website, mobile apps, and other digital platforms, within 14 working days from December 11. Additionally, SC directed Bybit to halt all advertising targeting Malaysian investors and shut down its Telegram support group. The enforcement is based on Section 7(1) of the Capital Markets and Services Act 2007, which prohibits the operation of digital asset exchanges (DAX) without authorization.

This is not Bybits first regulatory challenge. In 2021, SC placed Bybit on its investor alert list, warning the public of its unlicensed operations. While Bybit has stated its compliance with the suspension directive, SC emphasized that investors using unregistered platforms are not protected under Malaysian securities laws and are at higher risk of financial fraud. The SC highlighted that only six licensed digital asset exchanges are authorized to operate in Malaysia, offering greater security and regulatory oversight for users.

Bybit‘s regulatory issues extend beyond Malaysia. In August, the company exited the French market due to stricter regulatory policies ahead of the European Union’s Markets in Crypto-Assets (MiCA) framework. The tightened regulations raised the bar for obtaining operational licenses for crypto firms. This global trend signals an increasing regulatory clampdown on the crypto sector, with unlicensed platforms facing mounting pressures worldwide. For investors, these enforcement actions underscore the importance of choosing compliant platforms to ensure the safety of their funds and mitigate potential risks.