Network School founder Balaji Srinivasan has called for a formal agreement with the Malaysian government after authorities launched an investigation into his tech community in Forest City, Johor, over allegations that it was hosting Israeli nationals using second passports.
Srinivasan said the project needs clear legal assurances to continue investing in Malaysia and warned that, without greater certainty, the community could relocate to countries offering a more supportive environment.
Malaysia investigates network school
Malaysia’s Home Affairs Ministry confirmed it is investigating Network School following allegations that Israeli citizens were residing within the community in violation of the country’s immigration rules.
The claims emerged after a social media post by the activist group Malaysian Protest 4 Palestine, which accused the community of becoming a gathering place for Israeli entrepreneurs.
Following an initial review, authorities said all 266 foreign residents examined were found to possess valid immigration documents.
Balaji calls for legal certainty
In a video addressed to Malaysian Prime Minister Anwar Ibrahim, Srinivasan said he is seeking a formal framework—potentially through a memorandum of understanding (MoU) or amendments to existing special economic zone provisions that explicitly welcomes Network School and its long-term operations.
He said the project requires more than general statements supporting technology investment and wants specific assurances that the community itself is welcome to build and expand in Malaysia.
According to Srinivasan, legal certainty is essential before committing additional capital to the country.
$122 million expansion put on hold
Srinivasan also revealed that Network School is pausing further investment in Malaysia, including a planned $122 million expansion, until the government provides sufficient guarantees that similar regulatory concerns will not arise again.
He stressed that if Malaysia cannot provide that certainty, the project is prepared to relocate its investment to jurisdictions that actively support innovation and technology communities.
“We will readily go somewhere else because I don’t want to be where we’re not welcome,” Srinivasan said.
Crypto communities face regulatory reality
The episode highlights a broader challenge facing blockchain-based and digital-native communities.
While projects like Network School aim to build decentralized ecosystems centered around entrepreneurs, creators, and technologists, they still rely on national governments for immigration policies, legal protections, and regulatory certainty.
Founded by former Coinbase CTO Balaji Srinivasan, Network School launched in August 2024 in Forest City, a special economic zone in Johor located near Singapore. The initiative markets itself as a physical campus where founders, developers, and technology builders can collaborate while embracing emerging technologies, including crypto and artificial intelligence.
Immigration rules at the centre of the dispute
Malaysia does not maintain diplomatic relations with Israel, and Israeli passport holders are generally prohibited from entering the country without special approval from the Ministry of Home Affairs.
Although authorities have not reported immigration violations during their initial investigation, the controversy has prompted renewed scrutiny of foreign residents participating in the Network School project.
The outcome of discussions between Srinivasan and the Malaysian government could determine whether one of crypto’s most ambitious physical communities continues expanding in Southeast Asia or shifts its operations to another country.
