The Malaysian Securities Commission (“SC“) announced on July 30, 2021 that it had initiated enforcement action against Binance, one of the world’s largest cryptocurrency exchange operators, for illegally operating a Digital Asset Exchange (“DAX“) in Malaysia. Under Sections 7 (1) and 34 (1) of the Capital Markets and Services Act 2007, all DAX operators must be registered as recognized market operators by the SC . The SC press release is available here.

The SC said it issued a public reprimand against Binance for continuing to operate illegally in Malaysia despite being placed on SC’s investor alert list in July 2020. In this regard, the public reprimand was issued against Binance Holdings Limited , its general manager Zhao. Changpeng and three other Binance entities, namely Binance Digital Limited (registered in UK), Binance UAB (registered in Lithuania) and Binance Asia Services Pte Ltd (registered in Singapore).

All four Binance entities have been ordered by the SC to:

1. deactivate Binance’s website (www.binance.com) and mobile apps in Malaysia within 14 business days of July 26, 2021;
2. immediately cease all media and marketing activities, including the dissemination, posting or sending of advertisements and / or other marketing materials, whether by email or otherwise, to Malaysian investors; and
3. immediately prevent Malaysian investors from accessing Binance’s Telegram group.

Zhao, as the CEO of Binance Holdings Limited, has also been ordered to ensure that the above guidelines are implemented by the four entities of Binance.

According to listing of the registered digital asset exchanges published by the SC (updated May 5, 2021), the SC has only registered three market operators recognized to establish and operate digital asset exchanges in Malaysia, namely Luno Malaysia Sdn Bhd, SINEGY Technologies (M) Sdn Bhd and Tokenize Technology (M) Sdn Bhd.