SFC Raises Red Flags: Floki Staking Programs Deemed Unauthorized

Here­’s a heads-up from the Hong Kong Securitie­s and Futures Commission (SFC). Two investment instrume­nts linked to the Floki ecosyste­m might be high-risk. They’re calle­d the “Floki Staking Program” and the “TokenFi Staking Program.”

The SFC highlighted that these products, which offer staking services with promised annualized returns ranging from 30% to over 100%, need more authorization for public sale in Hong Kong.

Staking, a method enabling users to earn rewards by contributing to blockchain security, involves participants depositing cryptocurrency into a staking pool. Similar to placing money into a savings account, this proof-of-stake mechanism validates transactions, ensuring blockchain security and decentralization.

The SFC underscored the need for more clarity from the overseeing body of these two products regarding the strategy to attain the declared high annualized return goals.

During its weekly recap session on the X (formerly Twitter), the Floki team responded to the SFC’s developments. The cryptocurrency platform highlighted that the SFC’s sole objection was the outstanding performance of the staking programs.

Although its discussions with the SFC remain undisclosed, Floki clarified that it collaborated with a marketing agency to initiate promotions for the Floki Staking Program and TokenFi Staking Program. The agency secured media space, and the Floki team believed it had obtained approval.

SFC Flags Digital Asset Risks, Adds Floki Products To Alert List

Nevertheless, the Floki team declined to comment on the potential continuation of their marketing campaign in Hong Kong. They reassured investors of their commitment to following all necessary protocols with the Hong Kong authorities.

Through the­ Internet, the SFC has share­d info about these programs with eve­ryone in Hong Kong. So, it happened on Jan 26, 2024 – the­y listed these products and the­ir crucial details in their Suspicious Investme­nt Products Alert List.

The SFC cautions investors against engaging in staking deals related to digital assets, as these may qualify as unauthorized collective investment schemes. However, such arrangements pose significant risks, and investors may have limited protection under the Securities and Futures Ordinance, potentially resulting in a complete loss of investments.

Furthermore, the SFC reiterated its dedication to upholding regulatory standards and safeguarding investors from fraudulent schemes. It emphasized that any violation of the law, including the promotion of unlicensed collective investment schemes, will be met with appropriate legal action.

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The author’s views are for reference only and shall not constitute any investment advice. Please ensure you fully understand and assess the products and associated risks before purchasing.

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