Floki has issued a comprehensive response to the Hong Kong Securities and Futures Commission’s (SFC) public warning about its staking programs, the “Floki Staking Program” and the “TokenFi Staking Program.”
The SFC’s caution, released on January 26th, expressed concerns about the high annualized returns promised by both staking programs, ranging from 30% to over 100%. In its official response titled “STATEMENT: RESPONDING TO HK SFC WARNING,” they acknowledged the SFC’s notice and expressed regret that the commission deemed it necessary.
Floki Addresses SFC Concerns: A Detailed Explanation
They clarified that, since December 2023, the project has been actively working with legal advisors to address potential regulatory issues related to the staking programs. The statement highlighted specific measures taken in Hong Kong, including prominent warnings on the staking websites, practical measures to block users from Hong Kong, and the suspension of offline marketing in the region.
The core issue identified by the SFC is the exceptionally high Annual Percentage Yield (APY) offered by the Floki and TokenFi staking programs. Floki sought to address this concern in a detailed explanation of the staking mechanism.
According to the statement, the unique feature of its staking program lies in rewarding participants with $TOKEN. Unlike other projects that use inflation or allocate a small percentage for staking, Floki concentrated rewards in the hands of users by avoiding fundraising from venture capitalists or presales.
Its APY is influenced by the market forces of $TOKEN, which, in turn, is tied to the success and market cap of TokenFi. The statement clarified that the APY has decreased as more users participated, emphasizing the volatile nature of rewards.
Furthermore, they emphasized the decentralization of its staking programs, assuring users that even if the team were to disappear, the programs would operate independently on the blockchain. The statement underlined the equal application of staking rules and the inability of the team to alter rewards or access users’ tokens.
Nevertheless, Floki’s response aims to provide transparency and clarity, assuring users of the project’s commitment to compliance and responsible engagement with regulators. The evolving regulatory landscape in the crypto space continues to pose challenges, and projects like Floki strive to navigate them while maintaining their commitment to decentralization.
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