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SFC Issues Warning on Floki and TokenFi Staking Programs in Hong Kong

The Hong Kong Securities and Futures Commission (SFC) has issued a warning to the public regarding the potential risks associated with investment products known as the “Floki Staking Program” and the “TokenFi Staking Program,” both of which are affiliated with the Floki ecosystem.

These products are marketed as offering staking services with promised annualized returns that range from 30% to over 100%.

However, it is crucial to note that neither of these products has received authorization for public sale in Hong Kong, as emphasized by the SFC.

Staking, a process that enables users to earn rewards by contributing to the security of blockchain networks, operates similarly to depositing money into a savings account.

Through the proof-of-stake mechanism, users validate transactions, thereby enhancing the security and decentralization of the blockchain.

The SFC has expressed concerns regarding the ability of the operators of these staking programs to deliver on the promised high annualized returns.

They have not provided a convincing strategy for achieving these ambitious targets.

In response to the SFC’s warning, the Floki team addressed the issue during one of their live spaces on X, formerly known as Twitter.

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They mentioned that the SFC’s primary concern appears to be that their staking programs have been exceptionally successful.

While the team did not disclose specific details of their discussions with the SFC, they did clarify that they had collaborated with a marketing agency to promote the Floki Staking Program and TokenFi Staking Program, believing they had received approval for their initiatives.

However, they could not confirm whether the marketing campaigns would continue in Hong Kong and assured their investors that they would work diligently to meet all requirements with the local authorities.

On January 26, 2024, the SFC took action by including both the Floki Staking Program and the TokenFi Staking Program, along with relevant details, on the SFC’s Suspicious Investment Products Alert List.

The SFC has advised investors to exercise caution when engaging in staking deals involving digital assets, as these may fall under unauthorized collective investment schemes, which carry significant risks and offer limited protection under the Securities and Futures Ordinance, potentially resulting in complete loss of investments.

Furthermore, the SFC has reaffirmed its commitment to enforcing regulatory standards and protecting investors from fraudulent schemes.

It has made it clear that any violations of the law, including the promotion of unlicensed collective investment schemes, will be met with appropriate legal actions to maintain the integrity of Hong Kong’s financial market.

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Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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