The Hong Kong Securities and Futures Commission (SFC) issued a public warning today, cautioning investors about the dubious nature of cryptocurrency staking products known as the “Floki Staking Program” and the “TokenFi Staking Program.” Both programs, affiliated with the broader Floki ecosystem, have raised concerns by claiming exceptionally high annualized returns ranging from 30% to over 100%.
Floki’s Distancing Act: Not Open to Hong Kong Users
Floki, in an attempt to distance itself from potential regulatory scrutiny, clarified on its official website that it is not open to users based in Hong Kong. Despite this disclaimer, both Floki and TokenFi play integral roles in the expansive Floki ecosystem, which is designed to provide various utilities for the FLOKI token.
TokenFi, a multichain tokenization platform launched on October 27, 2023, operates on both the Ethereum and Binance Smart Chain. The staking programs associated with Floki and TokenFi are closely intertwined, offering users opportunities to stake and earn rewards within their respective ecosystems.
The SFC’s press release highlighted the unapproved nature of these staking products, stressing that neither the “Floki Staking Program” nor the “TokenFi Staking Program” has received authorization for public offerings in Hong Kong. Furthermore, the administrators of these programs failed to convince the SFC regarding the feasibility of achieving the promised high annualized returns.
As a response to the potential risks associated with these products, the SFC has included both the “Floki Staking Program” and the “TokenFi Staking Program” in its Suspicious Investment Products Alert List as of January 26, 2024. This move aims to caution the public about these investment opportunities’ potential pitfalls and unregulated nature.
Through the press release, the SFC urged investors to exercise caution when engaging in “staking” arrangements involving virtual assets. Such arrangements could potentially be deemed unauthorized collective investment schemes, exposing investors to significant risks with limited or no protection under the Securities and Futures Ordinance (SFO). Investors were also advised to be wary of investment products promising excessively high returns, as they often carry the risk of being too good to be true.
Emphasizing its commitment to regulatory enforcement, the SFC stated that it would take appropriate actions in the event of any breach of the law related to these staking programs. This warning serves as a reminder for investors to conduct thorough due diligence and exercise prudence when considering cryptocurrency investment opportunities.
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