The Malaysian Securities Commission recently accused the Binance exchange of offering its services to Malaysians illegally. According to a local media report, Binance has been added to a blacklist, and investors have been advised not to use the platform.
Rise of Serious Jail Time
According to the warning by the Malaysia Securities Commission (SC), the Binance exchange is operating in the country without its authorization. As a result, Binance could be fined $2.3 million or a prison sentence of up to ten years. Alternatively, both penalties could be applied concurrently for violation of Malaysian law.
Binance Not Deterred
Commenting on the issue, a spokesperson declined to comment on whether the exchange offered its services in Malaysia. There are currently no indications that Binance plans to ban Malaysians from using its platform because of the SC warning.
Why SC Blacklisted Binance
One reason why Binance might have been blacklisted is its use of a Malaysian ringgit fiat-to-crypto gateway. The exchange recently added the ringgit on its P2P platform. In Malaysia, this is illegal. The SC has licensed only three crypto exchanges to offer this feature. As such, any other platform offering the service is breaking the law.
Another reason why Binance might have been blacklisted in the country is that it was actively marketing its services to Malaysians. Besides that, Binance has tried to launch a crypto debit card in the country. These activities are in breach of Malaysian law. Other firms blacklisted by the SC are Fidelity and eToro.
Experts note that while these companies in breach of Malaysian law, they are located outside the country. As a result, they are untouchable by the SC. If the platforms had opened local offices in the county, the SC would have most likely raided and shut them down. It also means that the companies do not need to answer to the SC.
For Malaysians using the Binance platform, it means they will enjoy less legal protection than other users. In Malaysia, they have been stripped of all legal protection and cannot make claims against the regulator or Binance if things go south, because of the blacklisting of Binance’s services.