The Securities and Futures Commission (SFC) of Hong Kong has issued a warning to the public regarding two investment products, namely the “Floki Staking Program” and the “TokenFi Staking Program.” These products are associated with the Floki ecosystem and are considered potentially risky.
The SFC explains that these products offer staking services and promise annualized returns ranging from 30% to over 100%. However, it is important to note that neither of these products has been authorized for public sale in Hong Kong.
Staking is a process where users can earn rewards by contributing to the security of a blockchain. When users stake their cryptocurrency, they contribute to a staking pool, similar to depositing money into a savings account. This mechanism validates transactions and ensures the security and decentralization of the blockchain.
The SFC emphasizes that the governing body behind these products has not convincingly demonstrated how they plan to achieve the high annualized returns they promise.
In response to the SFC’s warning, the Floki team addressed the issue during their weekly recap on the X platform. They explained that the SFC’s concern is that the staking programs are performing too well. While they couldn’t provide specific details about their discussions with the SFC, they clarified that they had worked with a marketing agency to promote the Floki Staking Program and TokenFi Staking Program. The team believed they had received approval and secured media space.
However, they could not confirm if the marketing campaign would continue in Hong Kong for the time being. They assured their investors that they would comply with all requirements and work with the Hong Kong authorities.
The SFC points out that information about these products is available online to the Hong Kong public. As a result, on January 26, 2024, the SFC added both products and their relevant details to the Suspicious Investment Products Alert List.
The SFC warns investors about staking deals involving digital assets, as they may be unauthorized collective investment schemes. These schemes come with high risks, and investors may have limited protection under the Securities and Futures Ordinance, which could result in a complete loss of investments.
Furthermore, the SFC reiterates its commitment to enforcing regulatory standards and protecting investors from fraudulent schemes. It states that any violation of the law, including the promotion of unlicensed collective investment schemes, will be met with appropriate legal action.
In a related magazine article, the question of Ethereum restaking is posed: is it a blockchain innovation or a dangerous house of cards?