Malaysia's Iskandar Puteri City Council (MBIP) has revoked the business license of Network School, the digital nomad community founded by Balaji Srinivasan, ordering it to cease all operations at its Forest City premises in Johor from Wednesday, July 22, 2026. The decision follows an investigation into alleged breaches of licensing conditions and premises usage requirements by the tech startup.
Regulatory Action and Violations
The MBIP's decision, announced on Tuesday, July 21, 2026, came after a special full council meeting that reviewed findings from inspections and enforcement checks conducted between July 12 and July 20. Authorities found that Network School was operating one unit without a valid business license and conducting unapproved business activities in another unit, which was licensed for office use. Johor Chief Minister Onn Hafiz Ghazi affirmed the state government's support for MBIP's decision, emphasizing that no investor or organization is above the country's laws.
Immigration Probe and Allegations
The high-profile probe into Network School was initially triggered by social media allegations claiming that Israeli nationals were among its participants and had entered Malaysia using passports from other countries. Malaysia, a staunch supporter of the Palestinian cause, does not have diplomatic relations with Israel and bars the entry of Israeli passport holders. However, Malaysia's immigration department confirmed that initial checks on 256 foreigners from 40 countries at Network School found they held valid travel documents. Despite no travel document violations being found, the focus shifted to the local licensing and premises-use breaches.
Founder's Response and Investment Impact
Prior to the shutdown order, Balaji Srinivasan, former CTO of Coinbase, a crypto exchange, and General Partner at a16z, had announced that Network School was pausing a planned RM500 million (approximately US$122 million) expansion in Malaysia. Srinivasan had expressed a desire for a memorandum of understanding with the Malaysian government to provide legal certainty for continued investment, stating that if Malaysia did not want their investment, they would reallocate capital to other countries. He had established Network School in Malaysia in October 2024, citing the country's pro-tech policies and digital nomad visa programs.
Background on Network School
Network School, founded by Balaji Srinivasan, is described as a private residential community and a digital nomad hub, with its first node established in Forest City, Malaysia. The initiative aimed to create an international tech community, attracting global talent and capital, aligning with Malaysia's ambition to become a top 20 global tech hub through initiatives like KL20 and digital nomad visas. The project had reportedly invested over RM100 million in its Forest City campus, employing Malaysians and supporting local tech startups.
What to Watch
The immediate future for Network School in Malaysia remains uncertain following the cease operations order. Attention will now turn to whether Balaji Srinivasan and the Network School team will pursue legal challenges or indeed reallocate their significant investment plans to other jurisdictions, as previously indicated. This event also puts Malaysia's broader appeal as a destination for global tech investment and digital nomad communities under scrutiny, particularly concerning regulatory clarity and consistency for international projects. The government's response to potential appeals or further statements from Network School will be key in shaping perceptions of its commitment to fostering a welcoming environment for tech innovation.
Original announcement: CNA (citing Iskandar Puteri City Council)