The Hong Kong Securities and Futures Commission (SFC) has cautioned the public about potentially risky investment products called “Floki Staking Program” and “TokenFi Staking Program.” Both products are affiliated with the Floki protocol.
According to the SFC, these products offer staking services and claim to deliver annualized returns ranging from 30% to over 100%. However, the watchdog emphasized that neither of these products has received authorization for public sale in Hong Kong.
Staking allows users to earn rewards by contributing to the blockchain’s security. When users stake cryptocurrency, they contribute to a staking pool, akin to depositing money into a savings account. The proof-of-stake mechanism validates transactions, ensuring the security and decentralization of the blockchain.
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— FLOKI (@RealFlokiInu) January 27, 2024
The regulatory body emphasized that the governing body of these two products has failed to convincingly show the Hong Kong SFC how they intend to achieve the stated high annualized return targets.
In its weekly recap live spaces on the X social media platform, the Floki team addressed the Hong Kong SFC development. The crypto platform emphasized that the SFC’s only complaint is that the staking programs perform too well.
While unable to provide specifics about its discussions with the SFC, Floki clarified that it collaborated with a marketing agency to initiate the Floki Staking Program and TokenFi Staking Program promotions. The agency secured media space, and the Floki team believed it had received approval.
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However, the Floki team said they could not speak on whether the marketing campaign would continue for the time being in Hong Kong. The team assured its investors it would go through all appropriate channels to fulfill all requirements with the Hong Kong authorities.
The SFC highlights that information about these two products is available online to the Hong Kong public. Consequently, on Jan. 26, 2024, the SFC included both products and their relevant details on the SFC’s Suspicious Investment Products Alert List.
The SFC cautions investors about “staking” deals involving virtual assets, which might constitute unauthorized collective investment schemes. These arrangements carry high risks, and investors may have minimal protection under the Securities and Futures Ordinance (SFO), potentially leading to a complete loss of investments.
Additionally, the SFC has emphasized its commitment to enforcing regulatory standards and protecting investors from fraudulent schemes. It mentioned that any breach of the law, including the promotion of unlicensed collective investment schemes, will be met with appropriate legal action.
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