The Hong Kong Securities and Futures Commission (SFC) has warned the public about potentially unsafe investment products such as “Floki Staking Program” and “TokenFi Staking Program.” Both goods are linked to the Floki ecosystem.
According to the SFC, these products provide staking services and claim to generate annualized returns ranging from 30% to more than 100%. However, the watchdog underlined that neither of the products have been approved for public sale in Hong Kong.
Staking enables users to earn incentives for contributing to the blockchain’s security. When users stake cryptocurrencies, they contribute to a staking pool, which is similar to depositing money into a savings account. The proof-of-stake system validates transactions, which ensures the blockchain’s security and decentralization.
The SFC stressed that the governing body for these two products has failed to demonstrate how it expects to meet the declared high annualized return expectations.
The Floki crew discussed SFC growth in its weekly summary live spaces on X (previously Twitter). The crypto platform stressed that the SFC’s lone issue is that the staking programs operate exceedingly effectively.
While Floki was unable to disclose specifics about its negotiations with the SFC, it did confirm that it worked with a marketing agency to launch the Floki Staking Program and TokenFi Staking Program advertising. The agency acquired media space, and the Floki team thought it had gotten permission.
However, the Floki team stated that they were unable to comment on whether the marketing effort would continue in Hong Kong at this time. The team informed its investors that it would go through all necessary steps to meet all criteria with Hong Kong authorities.
The SFC emphasizes that information about these two items is available online to the Hong Kong public. As a result, on January 26, 2024, the SFC added both items and their related details to the Suspicious Investment Items Alert List.
The SFC warns investors against staking trades involving digital assets, which may represent improper collective investment schemes. These arrangements pose significant risks, and investors may have little protection under the Securities and Futures Ordinance, perhaps resulting in a total loss of money.
Furthermore, the SFC has stated its commitment to implementing regulatory requirements and protecting investors from unscrupulous schemes. It stated that any violation of the law, including the marketing of unregistered collective investment schemes, will be faced with appropriate legal consequences.