Malaysian authorities have revoked the business licence of Network School, the technology-focused residential community founded by former Coinbase Chief Technology Officer Balaji Srinivasan, ordering the project to cease all operations in Forest City, Johor, effective July 22.
The decision was announced by Johor Chief Minister Onn Hafiz Ghazi following a special meeting of the Iskandar Puteri City Council (MBIP). The state government said the licence held by NSO Malaysia Sdn. Bhd., which operates Network School, had been cancelled after authorities reviewed inspection reports, enforcement findings and the company’s representations.
The closure follows an investigation into alleged immigration-related violations after social media posts claimed that Israeli nationals were participating in the community. Malaysia does not maintain diplomatic relations with Israel, making the allegations politically sensitive and prompting heightened scrutiny from state and federal authorities.
Johor’s government emphasized that while it welcomes foreign investment, companies must fully comply with Malaysian laws and regulatory requirements. Officials also urged the Malaysia Digital Economy Corporation (MDEC) to review and revoke any Malaysia Digital status previously granted to Network School if licensing conditions had been breached.
Regulatory Dispute Escalates
The latest order represents a sharp escalation from the company’s position only days earlier. Srinivasan had publicly dismissed reports that Network School was shutting down, describing them as “fake news” and arguing that the organisation had merely received notices relating to building signage and licensing issues affecting one section of its coworking premises.
According to Srinivasan, the company had been granted a remediation period to correct the deficiencies and members remained unaffected. He also requested a meeting with Malaysian Prime Minister Anwar Ibrahim’s office, warning that the regulatory dispute had placed more than MYR100 million (approximately $24 million) of investment in Malaysia at risk and caused future expansion plans to be put on hold.
Immigration officials previously stated that inspections found foreign participants possessed valid travel documents, although investigations into broader regulatory compliance continued. Johor authorities have also called on police, immigration and national security agencies to continue examining allegations involving passport use, identity representation and other possible violations.
Kazakhstan Expansion Signals Strategic Shift
The Malaysian shutdown coincides with Network School’s announcement that it has signed a memorandum of understanding with Kazakhstan to establish a new campus promoting what Srinivasan describes as a global hub for “techno-optimism.”
The proposed Kazakhstan operation is expected to offer expedited visas, simplified relocation procedures and cooperation on technology, artificial intelligence, startups and research initiatives. The agreement provides Network School with an alternative base as its Malaysian operations wind down.
Founded in 2024, Network School was conceived as a residential community for entrepreneurs, engineers, investors and remote workers inspired by Srinivasan’s concept of “network states”—digitally connected communities capable of developing their own governance and economic structures. The project selected Malaysia’s Forest City because of its technology-friendly policies and strategic location in Southeast Asia.
The closure marks a significant setback for one of the crypto industry’s highest-profile experiments in combining digital communities with physical infrastructure. It also underscores the growing importance governments are placing on regulatory compliance, immigration controls and national sovereignty as blockchain entrepreneurs pursue increasingly ambitious real-world projects.
