Malaysia Shuts Down Balaji Srinivasan's 'Network School' Over Licensing and Israeli-National Allegations

A hotel full of techno-optimists, shut down by a city council

Malaysia pulled the plug on Network School, the co-living community founded by former Coinbase chief technology officer Balaji Srinivasan, after the Iskandar Puteri City Council revoked its business license effective July 22, 2026, according to Johor chief minister Onn Hafiz Ghazi and reporting from AsiaOne and The Star.

Enforcement officers showed up at the Forest City site around 11:40 a.m. that Wednesday, sealed an entrance, and posted an official closure notice, The Star reported. The school's main signboard was already gone by the time officers arrived. Foreign participants were seen packing bags and saying goodbye in a hotel lobby.

What actually triggered it

The Johor government says the company, NSO Malaysia Sdn Bhd, violated its licensing conditions and used the Teluk Bintang premises for activities that didn't match its approved office-use license, according to The Star. Onn Hafiz said the decision followed a formal review of inspection reports, enforcement findings, and submissions from the company itself, not a snap political call.

But the timing wasn't random. Allegations surfaced on social media on July 14 claiming Israeli nationals had entered Malaysia using secondary passports to attend the program, according to The Star and Channel News Asia. Malaysia has no diplomatic relations with Israel and bars Israeli passport holders from entry entirely.

Malaysia's own immigration department inspected Network School the week before the shutdown and found members held valid travel documents, according to AsiaOne. Channel News Asia reported flatly that officials have not uncovered any travel-document offenses so far. So the specific allegation that kicked off the firestorm wasn't substantiated by the government's own inspection. What got Network School shut down, officially, was a licensing and zoning violation, not a proven immigration breach.

If the immigration probe came up empty, the question remains whether the licensing enforcement was a genuine regulatory matter or a face-saving mechanism after a politically charged accusation went viral. Onn Hafiz insists it was due process. Nothing in the available record proves otherwise, but nothing definitively rules out that the political heat accelerated a licensing review that might otherwise have sat untouched.

Srinivasan's response

Srinivasan, who renounced his U.S. citizenship in 2023, posted on X calling the Wall Street Journal's coverage a "hit piece" designed to paint him as "an odd duck" rather than "an early adopter," according to TechCrunch. He described himself as "a proud Singaporean."

Network School was pitched as step one of a seven-stage plan from Srinivasan's book "The Network State," aimed at building parallel, tech-governed societies outside existing nation-states. Membership started at $1,500 a month, according to The Star. The Wall Street Journal, as cited by TechCrunch, described the operation as "part tech incubator, part self-improvement retreat," and reported attendee complaints about moldy rooms and a lack of women and nightlife.

Srinivasan has already moved on. He announced a new campus agreement in Kazakhstan, according to TechCrunch, suggesting Network School's founder sees Malaysia as a setback, not a fatal blow.

The sovereignty angle Malaysian officials leaned into

Some Malaysian social media users argued Network School's explicit goal of building decentralized communities separate from existing nation-states posed a threat to Malaysian sovereignty, according to Channel News Asia. Onn Hafiz echoed that concern directly, stating that "no investor, company, or organisation may be placed above the sovereignty of the country's laws" and calling for tighter due diligence on funding sources, ownership, and the "narratives" promoted by companies operating in the state.

This represents an explicit statement from a government official not just enforcing a zoning rule but flagging a company's ideological mission as a factor in future vetting. Whether that becomes formal policy or stays rhetoric is unresolved.

What it means for other foreign investors

Analysts cited by Channel News Asia said the episode is unlikely to spook major tech investors like Microsoft, Google, or Oracle, since those firms operate with long-term capital commitments and direct coordination with federal authorities. Smaller entrepreneurs and startups eyeing Malaysia as a low-cost base are the ones who should take note, the outlet reported, since politically sensitive controversies can unravel a business license fast, even when the underlying legal violation is comparatively mundane.

Network School had hundreds of participants from countries including Russia, Canada, and India, according to Channel News Asia. None of the four sources indicate any criminal charges have been filed against Srinivasan, NSO Malaysia, or any individual participant. This remains a licensing revocation and a closed-for-now chapter, not a criminal case. Whether Malaysia's immigration department reopens its inquiry, or whether Kazakhstan becomes the next flashpoint, is an open question with no timeline attached yet.