Key Takeaways
- The Securities Commission Malaysia today issued an enforcement action against Binance.
- The exchange has been ordered to disable Binance.com and mobile apps in Malaysia by Aug. 8, 2021.
- Malaysian users have been warned to stop using the platform.
The Securities Commission Malaysia has issued an enforcement action against Binance, the world's largest cryptocurrency exchange by daily trading volume. Meanwhile, India is reportedly investigating Binance as part of a betting app laundering probe.
Binance Ordered To Shut Services In Malaysia
The Securities Commission Malaysia (SC) today issued an enforcement action against Binance Holdings and three global entities under its ownership: Binance Digital, Binance UAB, and Binance Asia Services.
The four entities have been ordered to disable the Binance.com website as well as its mobile apps in Malaysia by 8 Aug. 2021. Binance has also been prohibited from engaging in promotion through any media or marketing activity. The exchange has been instructed to restrict Malaysian investors in its Telegram group.
SC, the leading regulator of capital markets in Malaysia said that by "illegally operating", Binance violated the Capital Markets and Services Act 2007. In Malaysia, if a cryptocurrency exchange wants to offer trading services, it must register as Recognized Market Operators (RMO) with the SC.
In a press release, the SC stated that Binance CEO Changpeng Zhao has been "specifically ordered to ensure that the above directives are carried out."
The regulator warned Malaysian users to stop using the platform. A note read:
"Investors are advised to stop dealing with and investing through illegal DAX. Those who currently have accounts with Binance are strongly urged to immediately cease trading through its platforms and to withdraw all their investments immediately."
The enforcement action comes a year after Securities Commission Malaysia (SC) issued a notice that Binance was operating without registration in an Investor Alert List of 2020. However, it appears that Binance did not legally respond to last year's notice.
This is not the first time a regulator has accused Binance of operating without legal registration. Other countries including Japan, Italy, Poland, and Thailand have also found the same, and issued similar warnings.
Binance has faced a significant amount of scrutiny from regulators worldwide over the last few months. In addition to the Malaysia news, Bloomberg reported that India's anti-money laundering agency is currently investigating the exchange for its involvement in a betting app laundering probe. Anonymous sources told the publication that the Enforcement Directorate had called Binance executives in for questioning.
Several European and Asian nations have expressed concern with Binance's lack of compliance and the potential risk the exchange poses to investors, including Italy, the U.K., Singapore, and the Philippines.
Binance has since taken various measures to improve its regulatory compliance, such as reducing daily withdrawal limits for unverified users, shutting tokenized stock trading, and introducing a tax tool. Today, the exchange restricted derivatives trading for European users to comply with the laws.
However, the global exchange has not taken efforts to register with local regulators in most countries where it offers trading services.
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