The Hong Kong Securities and Futures Commission (SFC) has issued a public warning regarding two investment products affiliated with the Floki ecosystem, the “Floki Staking Program” and the “TokenFi Staking Program.” These programs, which promise annualized returns ranging from 30% to over 100%, have been flagged as unauthorized by the SFC.
SFC’s concerns over unauthorized crypto staking programs”
The SFC’s alert highlights that neither of the mentioned staking products has obtained authorization for public sale in Hong Kong. Staking programs like these enable users to earn rewards by contributing to a blockchain’s security through the proof-of-stake mechanism.
The SFC’s concern stems from the high annualized return targets claimed by these programs, coupled with a lack of convincing explanations from their governing bodies on how they intend to achieve these returns.
Floki team’s response
In response to the SFC’s warning, the Floki team conducted a weekly recap live discussion on the X platform (formerly Twitter). The team defended its staking programs, stating that the SFC’s primary complaint is that these programs have been performing exceptionally well.
While they acknowledged collaborating with a marketing agency to promote the Floki Staking Program and TokenFi Staking Program, they maintained that they believed they had received approval.
However, the Floki team did not provide specific details regarding their discussions with the SFC and refrained from confirming whether the marketing campaign would continue in Hong Kong. Nevertheless, they assured their investors that they are committed to fulfilling all regulatory requirements with the Hong Kong authorities.
SFC’s suspicious investment products alert list
The SFC’s alert extends to the general public in Hong Kong and serves as a cautionary measure against staking deals involving digital assets. Such deals may potentially constitute unauthorized collective investment schemes, carrying inherent high risks for investors. Importantly, investors in such schemes may have limited protection under the Securities and Futures Ordinance, which could result in the loss of their investments.
To further raise awareness and protect investors, the SFC included both the Floki Staking Program and the TokenFi Staking Program, along with their relevant details, on its Suspicious Investment Products Alert List on January 26, 2024.
SFC’s commitment to regulatory standards
The SFC reiterated its commitment to enforcing regulatory standards and safeguarding investors against fraudulent schemes. It emphasized that any breaches of the law, including the promotion of unlicensed collective investment schemes, will be met with appropriate legal actions. This statement underscores the importance of adhering to regulatory guidelines in the cryptocurrency and blockchain space.
Source: https://www.cryptopolitan.com/sfc-warns-of-unauthorized-staking-programs/