Important context. Several claims in this story remain allegations under investigation and have not been proven in court. The licensing breaches cited by MBIP are the stated official grounds for enforcement. This article summarises public statements and reporting as of 22 July 2026.
I have been watching this story unfold for two weeks and honestly, it has everything: a crypto billionaire-adjacent founder, a half-empty megacity in Johor, geopolitics, an anonymous Instagram post, and a city council meeting that ended a RM500 million investment plan.
Let me break down what Network School actually is, what happened, and how the government responded.
So what is Network School, actually?
Despite the name, it is not a school in any way Malaysians would recognise. Network School is essentially a co-living and co-working community for tech professionals, entrepreneurs and content creators, launched in 2024 by American entrepreneur Balaji Srinivasan, the former chief technology officer of crypto exchange Coinbase.
It is not a government-recognised university and it does not award degrees.
For roughly US$1,500 a month (around RM6,100), members get hotel accommodation, meals, gym access, tech workshops and hackathons.
Operations are split across the Forest City Marina Hotel, a members-only cafe and event spaces, and a management office at Starview Bay.
Think of it as a subscription-based campus for digital nomads, one hour from Singapore.
The Bigger Idea
Network School is a real-world experiment based on Srinivasan’s 2022 book The Network State. The theory: communities form online around shared values first, then acquire physical territory, then eventually seek some form of recognition. Forest City was meant to be the physical part of that experiment. That “startup society” framing is exactly why some Malaysians found the project fascinating, and others found it unsettling.
Srinivasan says he set up in Malaysia in October 2024, drawn by the KL20 initiative, digital nomad and investor visas, and the Johor-Singapore Special Economic Zone.
He claims the community attracted thousands of engineers, investors and entrepreneurs from more than 70 countries, and that over RM100 million had already been invested in Forest City without any government funding.
The case: one Instagram Post started everything
In early July, allegations circulated on social media claiming that Israeli nationals had joined the programme by entering Malaysia using second-country passports.
Reporting traced the spark to an Instagram post by an activist account, which accused Network School of becoming a gathering place for Israeli entrepreneurs.
The timing was politically charged too: the accusations surfaced shortly before the Johor state election.
Why is this such a big deal? Malaysia has no diplomatic relations with Israel, and Israeli passport holders are barred from entering the country.
Any suggestion that this rule was being bypassed via second passports was always going to trigger a serious response.
What The Raid Found
On 14 July, immigration authorities inspected the Forest City campus and checked hundreds of passports belonging to people from 40 countries, including dual-passport holders. The Immigration Department later said all 266 foreign nationals inspected possessed valid immigration documents based on its records. So on the immigration question specifically, no violations were confirmed from that inspection. The probe is not closed though: the Immigration Department has since said it has been unable to trace 19 individuals linked to Network School.
Then why did it get shut down?
Here is the part a lot of people are missing.
The shutdown was not officially about passports. It was about business licensing, which sits with the local council, Majlis Bandaraya Iskandar Puteri (MBIP).
According to NST, after inspections on 12, 14, 19 and 20 July, MBIP found problems at both premises linked to the operator, NS0 Malaysia Sdn Bhd.
Premise 1 (P-01-11, Teluk Bintang): No licence at all
One premise was operating without any MBIP business licence. It received a Stop-Business Notice under By-Law 3(1) of the MBIP Trade, Business and Industrial Licensing By-Laws 2018.
Premise 2 (P-01-12, Teluk Bintang): Wrong category
The second premise held a valid office licence but was allegedly used for classroom activities and business promotions, which breached the approved business category. Its licence was revoked.
Bonus: Signage issues
MBIP also issued an advertisement licence notice under Section 107(2) of the Local Government Act 1976 for signboards that did not comply with licensing conditions.
On 21 July, a special full council meeting decided to revoke the business and advertising licences of NS0 Malaysia Sdn Bhd and order the cessation of all activities in Forest City, effective 22 July 2026.
MBIP warned it would pursue prosecution if the company continued operating.
That enforcement was carried out the very next morning. Council officers arrived at the premises at around 11.40am on 22 July, inspected the site, sealed an entrance and pasted an official closure notice.
The main signboard had already been taken down before they arrived, and other Network School signboards around the area were removed or covered up. Reporters at the scene saw several foreigners believed to be participants packing luggage and saying goodbye in a hotel lobby.
Then the federal layer landed too
MDEC said it is taking immediate steps to revoke the Malaysia Digital status of NS0 Malaysia Sdn Bhd, following the council’s decision. Onn Hafiz had specifically urged the Digital Ministry and MDEC to review any recognition previously granted to the company if conditions were not complied with, so this is national-level enforcement stacking on top of the local licensing action.
How The Government Responded
This became an all-levels-of-government story very fast. The responses, in order of appearance:
Prime Minister Anwar Ibrahim said on 15 July that Malaysia would not compromise on its policy of refusing entry to Israeli nationals.
Menteri Besar Onn Hafiz Ghazi backed the MBIP revocation, stressed that no one is above the law, and called on the Home Ministry, Immigration Department and police to keep investigating any misuse of second passports or misrepresentation of identity, calling Johor a strategic gateway bordering Singapore that cannot afford immigration weaknesses, FMT reported.
Digital Minister Gobind Singh Deo said any alleged breach of law or licensing must be thoroughly investigated.
Even Forest City’s master developer put out a statement welcoming the probe and saying no tenant or operator is above the law.
Balaji’s Counter-Move: RM500 Million On Pause
Srinivasan did not take the enforcement quietly.
He announced that a planned expansion worth more than RM500 million is now on hold, along with a global merit scholarship he was planning with the Replit founder.
He requested a meeting with the Prime Minister to discuss a memorandum of understanding, saying he is not asking for money, just assurances that the situation will not recur.
He also warned that Network School could move its capital elsewhere if it is not welcome.
The twist: one day later, they announced Kazakhstan
On 22 July, the same day the Forest City premises were sealed, Srinivasan announced on X that a memorandum of understanding had been signed between the Republic of Kazakhstan and Network School for a new campus, which he described as a haven for the global technology-optimist community.
A five-year agreement
Covering AI education programmes, research, start-up support and international programmes for researchers, plus conferences, forums and hackathons.
The sweeteners Malaysia did not offer
Srinivasan says the new hub comes with faster visa processing, relocation support and talent recruitment help.
And possibly the flagship event
Both parties will explore hosting a Network State Conference in Kazakhstan in 2026.
Kazakh news portal El.kz reported that the MOU is with the country’s Ministry of Artificial Intelligence and Digital Development, signed by Srinivasan and Deputy Prime Minister Zhaslan Madiyev. This is not a vague letter of intent either.
