Securities Commission Malaysia Issues Another Warning for Investors in Unauthorized ICOs and Digital Asset Exchanges

The Securities Commission Malaysia (SC) is out with another warning cautioning investors about initial coin offerings and digital asset exchanges which have not been authorized. The SC says they have seen an increase in both complaints and queries from the public about these crypto offerings.

“The SC advises the public to be wary of any persons offering ICOs. The SC has not authorized any ICOs pending the finalization of its guidelines,” states the SC.

The SC reaffirms that any digital asset offering, including ICOs, requires regulatory approval first.

The SC issued updated rules regulating digital assets in January 2019.

The SC would like to remind investors to be mindful of the potential risks associated with ICO schemes, notably:

  • an ICO issuer not having a physical presence in Malaysia would make it
    difficult to verify the authenticity of the ICO. Further, the recovery of invested
    monies may be subject to foreign laws or regulations;
  • the involvement of unauthorized individuals heightens the risk and exposure
    to fraud, money laundering, and terrorist financing;
  • the ICO may be structured in such a way as to limit the legal protection and
    recourse for the investors against an ICO issuer; and
  • cyber-security risks including hacking and stealing of online personal
    information.

The digital asset sector has experienced rampant acts of fraud. Fraudulent ICO issuers have been widely documented. Crypto exchanges have experienced multiple scams and hacks.

Even though a platform may call itself an “exchange,” this does not mean it has been authorized by the SC.

On June 4, 2019, the SC registered three Recognized Market Operators (RMOs) to establish and operate DAX in Malaysia.

These three DAX operators, namely Luno Malaysia Sdn Bhd, SINEGY Technologies (M) Sdn Bhd, Tokenize Technology (M) Sdn Bhd. The trio has been given nine months to fully comply with all regulatory requirements.

There are currently no other authorized crypto exchanges operating in Malaysia.

All other crypto exchanges have been told to “immediately cease all activities related to the trading
of digital assets and return all monies and assets collected from investors.”

This also applies to operators who were under the SC’s initial transitional period list.

Persons in breach of the rules may be liable to a fine or imprisonment term not exceeding ten years or both.

Members of the public may verify if a digital asset operator is registered with the SC
at https://www.sc.com.my/development/digital/digitalassets.

 

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