The Securities and Futures Commission (SFC) of Hong Kong has issued a warning to investors regarding the allure of the ‘Floki Staking Program’ and ‘Tokenfi Staking Program.’
Despite promising high annualized returns, these programs operate without the necessary regulatory approval, posing significant risks to participants.
The Securities and Futures Commission (SFC) of Hong Kong has raised an alarm concerning two cryptocurrency investment schemes, namely the “Floki Staking Program” and the “Tokenfi Staking Program.” These ventures, part of the Floki ecosystem, are enticing investors with the promise of exceptionally high annualized yields, varying between 30% and 100%. Despite these lucrative offerings, the SFC has clarified that neither of the programs holds the requisite legal sanction for public distribution within Hong Kong, thereby posing potential financial hazards to investors.
Staking, often likened to placing funds in a savings account, plays a pivotal role in supporting the operational framework of blockchain networks. In this arrangement, investors’ staked digital assets are leveraged by the project for various operational needs, such as transaction validation. While staking continues to gain traction, the SFC has cautioned investors, pointing out that such staking schemes could potentially be regarded as unauthorized collective investment schemes, underscoring the need for vigilance and thorough due diligence.
The Securities and Futures Commission (SFC) has intensified scrutiny over the “Floki Staking Program” and the “Tokenfi Staking Program,” casting doubts on the feasibility of their advertised high annualized returns. The regulator’s probe highlighted the administrator’s failure to convincingly explain the attainment of such lofty return targets. Consequently, on January 26, both programs were earmarked on the SFC’s Suspicious Investment Products Alert List .
The regulator has also issued a stern warning to investors about the dangers of engaging in unregulated investment schemes, particularly those promising “too-good-to-be-true” returns. The regulatory body emphasized that these enticing investment opportunities carry a high risk of total capital loss, offering scant safeguards under the Securities and Futures Ordinance (SFO).
The SFC has declared its readiness to enforce legal measures against any violations of the law, explicitly targeting the promotion of unlicensed collective investment schemes. This stance underscores the commission’s commitment to protecting investors and upholding the integrity of Hong Kong’s financial markets.
In response to the SFC’s apprehensions, the Floki team addressed the situation during their weekly recap live session on X. They recognized the SFC’s reservations, attributing them chiefly to the stellar performance metrics of their staking programs.
Floki confirmed its engagement with a marketing firm to promote these offerings but acknowledged uncertainties regarding the continuation of its promotional activities in Hong Kong. The team reassured stakeholders of their resolve to adhere to local regulatory frameworks, emphasizing their dedication to maintaining compliance.
Later, in a Medium article , the team outlined that Floki’s staking program maintains its substantial Annualized Percentage Yield (APY) through an innovative rewards mechanism. This mechanism utilizes $TOKEN from its counterpart, TokenFi. The program is characterized by an APY that adjusts in response to market conditions, a distribution strategy that is both decentralized and focused on the community, and the absence of financial backing from venture capitalists or pre-sale events.
Floki stated in the Medium post:
“We’ve taken steps to mitigate concerns in jurisdictions where the regulatory framework does not specifically cover or cater for the staking programs. As indicated by the statement of the SFC, it appears that the high APY of the Floki and TokenFi staking programs is their key concern”.