Malaysia’s SC Takes Action Against HUOBI

The Securities Commission (SC) has accused Huobi, one of the leading cryptocurrency exchanges globally, and its associated brands of engaging in unauthorized activities in the capital market. Huobi, previously one of the top three platforms in China, currently ranks as the sixth-largest cryptocurrency exchange globally based on trading volume, competing with industry giants such as Coinbase, Binance, and Kraken.

The SC specifically mentioned Huobi Global's CEO, Leon Li, to ensure compliance with the directives issued by the regulatory authority. According to the SC's statement, Huobi Global Limited has been ordered to cease its operations in Malaysia, including disabling its website and mobile application on various platforms like Apple Store, Google Play, and other digital application platforms.

Additionally, Huobi Global has been directed to stop circulating, publishing, or sending any advertisements, including through email or social media platforms, to Malaysian investors. The Malaysian regulator highlighted that Huobi had been persisting in its illegal operations in the country, despite being included in the SC's caution list since July 2020. This list comprises individuals or entities conducting regulated activities or providing market-making services without proper authorization, approval, or recognition.

Notably, Huobi had previously released a misleading statement in November 2020, claiming to have obtained a license from the “Malaysian authorities” to offer a “safe and regulated way to trade cryptocurrencies” in the country. However, the SC emphasizes that Malaysian citizens should avoid services provided by unapproved or unlicensed companies or individuals.

Engaging in regulated activities without a valid license or registration as a Recognized Market Operator (RMO) from the SC is considered an offence under the Capital Markets and Services Act 2007. Individuals may face imprisonment of up to ten years and fines if found guilty.

Currently, the SC has only registered two platforms as Initial Exchange Offering (IEO) operators: Kapital DX (KLDX), recently launched, and equity crowdfunding platform pitchIN, which plans to introduce its IEO platform later this year.

The SC clarified that Huobi was only allowed to operate within the jurisdiction of Labuan and required additional approval to provide crypto trading services outside Labuan. Earlier this year, Huobi's founder, Justin Sun, revealed in an interview that the exchange had applied for a license to offer crypto trading services in Hong Kong, as the Chinese territory aims to become a hub for digital assets.

Sun also announced that Huobi's Asia headquarters would be relocated from Singapore to Hong Kong in a significant shift. The move involves launching a new exchange in Hong Kong named Huobi Hong Kong. Huobi was acquired in October by About Capital, a Hong Kong-based fund management firm founded by Ted Chen, who established China's hedge fund giant Greenwoods Asset Management. Earlier this year, Bloomberg reported that the founder, Leon Li, sought to sell his majority stake in Huobi for over $1 billion, valuing the exchange at $3 billion.

Following the ownership transition, the exchange has embarked on various international brand promotion and business expansion initiatives. These include establishing a global strategic advisory board and injecting capital into a margin and risk provision fund.