Kvällsposten has reported that several people in the organisation shared anti-Semitic posts and violent images on social media.
SSU's leadership in Stockholm has now set an ultimatum for the Malmö branch to sort out the mess or lose further funding.
Last year, SSU Malmö also invited an imam to speak who terror researcher Magnus Ranstorp describes as "a prominent lecturer in the Salafist milieu".
During a board meeting for SSU Malmö earlier this week, both the imam's invitation and another elected member's anti-Semitic post on Facebook were discussed. This led to the person who shared the offensive post resigning.