The Securities and Futures Commission of Hong Kong (SFC) has issued a stern public warning regarding two staking products: the “Floki Stake Program” and the “TokenFi Stake Program.” The financial regulator deems both of these staking products to be “suspicious,” and they are affiliated with the Floki protocol.
Hong Kong SFC issues warning on pledging
In a press release shared with the media, the SFC noted that both Floki Staking Program and TokenFi Staking Program purported to offer “high annualised return targets ranging from 30% to over 100%.” However, the regulator stressed that these two crypto offerings have not been authorized in Hong Kong.
Staking is a way for cryptocurrency holders to earn rewards for supporting the operation of a blockchain. By committing their crypto assets to a staking pool for a certain amount of time, owners can earn more cryptocurrency.
The Securities and Exchange Commission says the Floki Protocol has failed to satisfactorily demonstrate how its staking products are able to achieve the advertised high annualised returns. As such, the financial regulator added these products to its Investor Alert List of Suspicious Investment Schemes on Friday, January 26.
Additionally, the SFC issued a stern warning to investors about “pledging” arrangements related to digital assets, as they may pose high risks and lead to unauthorized collective investment schemes. The financial regulator added:
Investors should also be wary of investment products that claim to offer “too good to be true” returns, and remain vigilant when making investment decisions.
Finally, the SFC reinforced its commitment to ensuring compliance with regulatory standards and protecting the Hong Kong public from fraudulent schemes.
Floki Team Addresses 'Suspicious Product' Claims
The Floki team discussed the SEC’s statement regarding its staking product during its weekly recap space on platform X on Saturday, January 27. The protocol hinted at ongoing conversations with the Hong Kong regulators on the matter.
While the team didn’t share much about its dealings with the SEC, it did mention working with a marketing agency and beginning to promote the staking product. The protocol alleged that it believed it had approval once the marketing agency secured media space.
Looking ahead, the Floki team noted that it could not ascertain whether the marketing activities of the Floki staking program and the TokenFi staking program will continue in Hong Kong. However, the protocol assured its investors that it will ensure compliance with all necessary regulations of the watchdog.
