Malaysia’s Securities Commission cracks down on Bybit for operating without registration

The Securities Commission of Malaysia has instructed Bybit and its chief officer to cease the operation of all digital platforms in Malaysia and also halt all advertisements targeting Malaysian audiences.

The SC published in its media release that it has begun enforcement proceedings against Bybit, a cryptocurrency exchange, and its business chief, Ben Zhou, for providing a crypto-selling platform without adequate registration on Dec. 27. The platform had been ordered to cease all digital platforms operating in Malaysia from Dec. 11 onwards, within 14 business days. This also includes Bybit’s website and mobile applications. The company must also cease advertising to Malaysian investors and deactivate its local Telegram support group.

The SC raised apprehensions regarding Bybit’s compliance with regulatory obligations and investor protection. The regulator said offering businesses a digital asset exchange without obtaining the SC’s Recognised Market Operator registration is an offence under section 7(1) of the Capital Markets and Services Act 2007. Both Bybit and Zhou have already been included in the SC’s Investor Alert List for similar regulatory offenses since July 2021.

Bybit has complied with the enforcement directions, reiterated SC. However, it also cautioned Malaysian investors that trading with unregistered platforms means they are unprotected under the securities laws of Malaysia, making them more susceptible 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 has confirmed the enforcement action on its Malaysian Telegram channel, saying they realize that this may bring some inconvenience. The exchange also noted there is hope to reconnect in the future with Malaysian investors if and when they obtain the necessary licenses.

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

ByBit’s Malaysian Telegram message

This marks the second European country where Bybit’s operations have been impacted recently. In August, Bybit left the French market after the country implemented stricter licensing requirements in preparation for the European Union’s Markets in Crypto-Assets regulations. This led to a risk of non-compliance for Bybit across multiple jurisdictions, highlighting the regulatory scrutiny crypto exchanges have been under in recent times.