By Bitcoin.com - 3 months ago - Reading Time: 2 minutes
Hong Kong’s SFC Issues Warning on Floki’s ‘Highly Risky’ Staking Programs
A Hong Kong watchdog, the SFC, has cautioned investors about the enticing yet potentially risky ‘Floki Staking Program’ and ‘Tokenfi Staking Program,’ which offer high annualized returns without the required regulatory green light.
SFC Warns Against Unregulated Floki and Tokenfi Crypto Staking Programs
The Hong Kong Securities and Futures Commission (SFC) has issued a public warning against the “Floki Staking Program” and “Tokenfi Staking Program,” two crypto-related investment products promising unusually high returns.
Both programs, associated with the Floki ecosystem, offer cryptocurrency staking services with promised annualized returns ranging from 30% to over 100%. However, the SFC states that these products have not received the necessary authorization for public offering in Hong Kong, thereby placing potential investors at risk.
Staking, a process akin to depositing money into a savings account, contributes to blockchain operations. Staked cryptocurrencies are locked up in a project. The project then uses these staked coins to maintain its operations, such as validating transactions. Despite its growing popularity, the SFC warns that such arrangements might constitute unauthorized collective investment schemes.
The SFC’s investigation revealed that “[t]he administrator of the two products has also not been able to demonstrate to the SFC’s satisfaction how the high annualised return targets could be achieved.” As a result, the SFC included both the “Floki Staking Program” and “Tokenfi Staking Program” in its Suspicious Investment Products Alert List on Jan. 26.
Addressing these developments, the Floki team acknowledged the SFC’s concerns in their weekly recap live spaces on the X. They contended that the SFC’s primary issue was the programs’ high performance. While confirming their collaboration with a marketing agency for the promotion of these programs, Floki admitted to a lack of clarity regarding the continuation of their campaign in Hong Kong. They assured investors of their commitment to comply with local regulations.
In addition to the risk of participating in unregulated schemes, the SFC cautioned investors about the allure of “too-good-to-be-true” returns. The SFC underlined that such investments could lead to a total loss, with minimal protection under the Securities and Futures Ordinance (SFO).
The SFC has stated its intention to take appropriate legal action against any breach of the law, including the promotion of unlicensed collective investment schemes.
Do you think the SFC is doing a public service by warning people about Floki’s staking products? Share your thoughts and opinions about this subject in the comments section below.
Original source: Bitcoin.com