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Crypto exchange struggles deepen for Huobi and Hotbit
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(Kitco News) - The Securities Commission (SC) of Malaysia has ordered the Huobi Global Limited cryptocurrency exchange to cease operations in the country, saying it has been operating illegally without registration.
"The SC has issued a public reprimand against Huobi Global Limited, and Leon Li for operating illegally in Malaysia," a media release from the regulator said. "In addition, the SC has ordered Huobi Global Limited to stop its operations in the country, including disabling its website and mobile application on several platforms such as Apple Store, Google Play and any other digital application platform."
The exchange has also been directed to halt the circulation, publishing or sending of any advertisements to Malaysian investors. Leon Li, the CEO of Huobi, was directly named by the SC as being tasked with ensuring that these directives are carried out.
According to the SC, "This decision comes after concerns about the platform's compliance with local regulatory requirements and protecting investors' interests."
Last year, the SC placed Huobi on its investor alert list for operating without registering as a recognized market operator (RMO), which is viewed as a serious offense under the Capital Markets and Services Act.
This latest development represents an escalation of that alert, with the SC ordering an immediate halt to all trading activities and encouraging Malaysian users to withdraw all their investments from the platform and close their accounts.
The SC concluded its update by advising Malaysian residents to only invest and deal with RMOs that are registered and legally compliant in the country.
"Registered RMOs have undergone strict regulatory scrutiny and are required to adhere to strict guidelines so that investors are protected under Malaysia's securities laws," the SC wrote. "Those who invest with unlicensed or unregistered entities or individuals are exposed to risks such as fraud and may not be protected under Malaysian securities laws."
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Hotbit shut down trading services
The Hotbit cryptocurrency exchange, which has been in operation since 2018, announced on Monday that it would be closing down, citing a deterioration in operating conditions and changes in the crypto industry trend.
According to Hotbit, after the exchange was forced to suspend its operations for several weeks last August while a former member of its team was under investigation, "the industry has experienced a series of crises, including the collapse of FTX, bank crises causing USDC off-peg incidents, resulting in continuous outflows of funds from CEX users, including Hotbit, and deteriorating cash flow."
The exchange also noted that, following the collapse of FTX and other prominent firms like BlockFi and Genesis, the industry is being pushed towards embracing regulation or becoming more decentralized.
"The Hotbit team believes that centralized exchanges (CEX) are becoming increasingly cumbersome, with highly complex and interconnected businesses that are difficult to comply with, whether for compliance or decentralization, and are unlikely to meet long-term trends," the announcement said.
Hotbit has also been the target of numerous cyber attacks and the exploitation of project defects by malicious users, which has resulted in significant losses. "Therefore, the Hotbit team believes that the operation model of supporting a diverse range of assets is unsustainable from a risk management standpoint," the exchange concluded.
Hotbit users have been given until June 21 to withdraw their remaining assets.
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