The Malaysian authorities have moved against Network School, a private technology-focused commune operating in Forest City, Johor, after it sparked controversy over allegations involving Israeli nationals and non-compliance with licensing requirements. Earlier today, the Iskandar Puteri City Council (MBIP) officially shut down and sealed the organisation’s premises, while the Malaysia Digital Economy Corporation (MDEC) announced that it is taking immediate steps to revoke the company’s Malaysia Digital status.
According to Harian Metro, a team of MBIP enforcement officers arrived at Network School’s premises in Forest City and carried out the closure. The premises were officially sealed, with enforcement officers displaying a notice ordering the closure under By-law 49(2) of the MBIP Trade, Business and Industrial Licensing By-laws 2018.
The action follows MBIP’s announcement yesterday that it would revoke Network School’s business licence after determining that the company had breached several licensing requirements. The local authority also issued a notice ordering the company to cease operations effective 22 July 2026.
What Is Network School?
Launched in 2024, Network School is a private residential community founded by former Coinbase Chief Technology Officer and investor Balaji Srinivasan. The initiative describes itself as a technology-focused community where entrepreneurs, software developers, investors, researchers and digital nomads can live and work together while participating in educational programmes, networking activities and startup development.
The community recently became the centre of public controversy after claims circulated on social media alleging that Israeli nationals were among its participants. As Malaysia does not maintain diplomatic relations with Israel, Israeli passport holders are generally prohibited from entering the country without special approval. The allegations prompted investigations by multiple government agencies, although immigration authorities have stated that no evidence of wrongdoing has been found among the foreign nationals investigated.
Separately, Forest City is a large-scale mixed-use development located near the Malaysia-Singapore border. Developed as a smart city featuring residential, commercial, education and business districts, it was envisioned as an international hub capable of attracting foreign investment, businesses, and long-term residents. However, the city has frequently attracted public attention over its relatively low occupancy rates, while its openness to international residents has also placed it under scrutiny.
Revocation Of Malaysia Digital Status
According to The Edge, MDEC confirmed that it is taking immediate steps to revoke the Malaysia Digital status granted to NSO Malaysia Sdn Bhd, the company operating Network School in Forest City. In a statement, the agency explained that one of the conditions attached to Malaysia Digital status is that companies must obtain all relevant permits and licences while complying with applicable laws and licensing requirements.
MDEC said the company has breached those conditions, prompting the agency to begin revocation proceedings. The agency added that while Malaysia continues to welcome high-quality digital investments, compliance with Malaysian laws and regulations remains non-negotiable.
For those who are unfamiliar, Malaysia Digital is a national initiative administered by MDEC to attract and support companies involved in digital technology and innovation. Replacing the former Multimedia Super Corridor (MSC) Malaysia programme in 2022, it offers eligible companies various incentives and facilitation services to encourage investment and the growth of Malaysia’s digital economy. Companies granted Malaysia Digital status may be eligible for tax benefits, access to knowledge workers, and other government facilitation measures.
Immigration Investigation Still Ongoing
Yesterday, Immigration Department director-general Datuk Zakaria Shaaban revealed that authorities had identified 430 individuals linked to Network School. Of that number, 210 people remain in Malaysia, 201 have already left the country, while another 19 individuals are currently unaccounted for. Zakaria said there is a possibility that the remaining may have exited Malaysia through illegal channels.
The controversy was fuelled by allegations on social media claiming that Network School was part of an Israeli agenda to establish a presence in Malaysia through cryptocurrency-related investments. Authorities have not publicly confirmed those claims, with the enforcement actions announced so far centred on licensing and regulatory compliance.
(Source: Harian Metro / The Edge Malaysia / FMT [1] [2])
