Hong Kong SFC Cautions Against Unauthorized Floki Staking

The Hong Kong Securities and Futures Commission (SFC) has issued a public warning regarding the risks associated with investment products known as “Floki Staking Program” and “TokenFi Staking Program.”

Both of these products, affiliated with the Floki ecosystem, are offering staking services with promises of annualized returns ranging from 30% to over 100%.

However, the SFC has clarified that neither of these products has received authorization for public sale in Hong Kong.

Concerns Raised by the SFC on Floki

Staking services allow users to earn rewards by contributing to the security of a blockchain network.

Despite the potential benefits, the SFC has expressed concern about the high annualized return targets claimed by these staking programs. Hong Kong regulatory authorities are trying to expand their monitoring of the cryptocurrency market.

The SFC emphasized that the governing body behind these products has not provided convincing explanations of how such returns will be achieved.

Response from Floki Team

In response to the SFC’s cautionary statement, the Floki team has addressed the situation in their weekly recap live spaces on the X platform (formerly Twitter).

They acknowledged the SFC’s concerns and explained that their staking programs have been performing well, which appears to be the primary issue raised by the regulator.

However, they clarified that they had collaborated with a marketing agency to promote these programs and believed they had received approval for their activities.

Despite this, the Floki team refrained from providing specific details about their discussions with the SFC and expressed uncertainty about the continuation of their marketing campaign in Hong Kong.

They assured investors that they would comply with all necessary requirements and regulations set by the Hong Kong authorities.

SFC Includes Floki in its Flagged List

In response to the unauthorized promotion of these products, the SFC has taken decisive action to maintain Hong Kong established status as a frontrunner in fostering a more controlled and trustworthy atmosphere for players in the cryptocurrency business by enforcing licensing regulations.

This they did by including both the Floki Staking Program and TokenFi Staking Program, along with relevant details, on the SFC’s Suspicious Investment Products Alert List as of January 26, 2024.

The commission has cautioned investors about the risks associated with staking deals involving digital assets, particularly unauthorized collective investment schemes, which may result in significant financial losses and minimal legal protection for investors under existing regulations.

Furthermore, the SFC has reaffirmed its commitment to enforcing regulatory standards and safeguarding investors from fraudulent schemes.

It has warned that any violations of the law, including the promotion of unlicensed collective investment schemes, will be met with appropriate legal action to ensure investor protection and market integrity.