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Justice Served: $451M Penalty for Firms Behind Binary Options Fraud

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Bybit Shuts Down Operations in Malaysia Following Regulatory Crackdown

 




Bybit, a leading cryptocurrency exchange, has officially ceased its operations in Malaysia following directives from the Securities Commission Malaysia (SC). This development highlights the ongoing regulatory challenges faced by global cryptocurrency platforms in adhering to local compliance standards.

Regulatory Actions Against Bybit

The SC flagged Bybit and its CEO, Ben Zhou, for operating a Digital Asset Exchange (DAX) in Malaysia without proper registration as a Recognized Market Operator (RMO) under the Capital Markets and Services Act 2007.

Key Actions Directed by the SC:

  • Disable Access: Bybit was ordered to shut down its website, mobile applications, and any other digital platforms within Malaysia by December 26, 2024.
  • Cease Advertising: The exchange had to halt all advertisements, both online and offline, targeting Malaysian investors.
  • Terminate Support Groups: Bybit was instructed to close its Malaysian Telegram support group immediately.

The SC emphasized that unregistered platforms like Bybit pose significant risks, including fraud and money laundering.

Investor Alert List and Compliance

Bybit had been on Malaysia’s Investor Alert List since July 2021, alongside other unregistered platforms such as Bitget and Atomic Wallet. This list is designed to caution investors against unregistered entities and individuals operating in the financial space.

The SC reminded investors:

  • Only platforms registered as RMOs have undergone strict regulatory scrutiny.
  • Investments with unlicensed entities lack protection under Malaysian securities laws, exposing investors to risks like fraud and money laundering.

Bybit has complied with all the SC’s directives and announced plans to return to the Malaysian market once it secures the necessary licenses.

Global Regulatory Challenges for Bybit

Malaysia is not the only country scrutinizing Bybit’s operations. The exchange has faced regulatory challenges in:

  • Cyprus: Bybit was recently added to the Cypriot financial regulator’s warning list.
  • France: Bybit plans to suspend withdrawal and custody services for French users starting January 2025 due to increased oversight.

Despite these challenges, Bybit continues to expand into other markets, recently securing licenses in Kazakhstan and Georgia and holding a provisional license in Dubai.

Broader Implications for the Crypto Industry

Bybit’s shutdown in Malaysia highlights the growing scrutiny of cryptocurrency exchanges globally. Regulators are increasingly emphasizing the need for platforms to comply with local laws to ensure investor protection and market integrity.

Investor Reminder:
The SC urges investors to report suspicious platforms and avoid high-risk schemes promising quick returns.

Conclusion

Bybit’s exit from Malaysia underscores the importance of compliance in the rapidly evolving cryptocurrency industry. As regulators tighten their oversight, exchanges must adapt to meet local standards, ensuring trust and safety for their users.

With plans to re-enter the Malaysian market and expand globally, Bybit’s journey reflects the challenges and opportunities in navigating the regulatory landscape of digital finance.

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