The Securities Commission Malaysia (SC) has taken enforcement action against Bybit Technology Limited, previously known as Bybit Fintech Limited, and its CEO, Ben Zhou (Yuchen Zhou), for operating a digital asset exchange (DAX) in Malaysia without proper registration.

Bybit and Ben Zhou have been on the SC’s Investor Alert List since July 2021, signaling regulatory concerns over their operations. The SC has now issued directives requiring the company to take immediate action to comply with local securities laws.

The SC has ordered Bybit to disable its website, mobile applications, and any other digital application platforms accessible in Malaysia within 14 business days from December 11, 2024. Bybit has also been instructed to cease all forms of advertising targeting Malaysian investors, including social media posts, and to terminate its Telegram support group catering to Malaysian users. Ben Zhou, as CEO, has been tasked with ensuring compliance with these directives.‍

Regulatory Breach

The SC’s action stems from concerns about Bybit’s non-compliance with Malaysian regulatory requirements and the potential risks posed to investors. Operating a DAX without obtaining registration as a Recognized Market Operator (RMO) constitutes a violation of Section 7(1) of the Capital Markets and Services Act 2007.

The SC views such breaches seriously, as unlicensed platforms expose investors to risks, including fraud and money laundering.‍

Compliance Achieved

As of now, Bybit has complied with all directives issued by the SC. However, the regulator has reiterated the importance of dealing only with entities registered as RMOs. Registered operators are subject to strict regulatory scrutiny and adhere to guidelines designed to protect investors under Malaysia’s securities laws.‍

Investor Advisory

The SC has advised investors to avoid unlicensed or unregistered entities, warning that they are not protected under Malaysian securities laws. This exposes them to significant risks, including fraud and the inability to seek recourse under the legal framework.