January 30, 2024
By Sharan Kaur Phillora
The Securities and Futures Commission (SFC) of Hong Kong has issued a public warning regarding high-yield crypto investment schemes, specifically highlighting the “Floki Staking Program” and “TokenFi Staking Program.” According to the SFC, neither of these programs is authorized to offer their services to the Hong Kong public.
Here’s what we know:
These staking programs claim to provide exceptionally high annualized returns, ranging from 30% to over 100%, which has raised concerns among regulators. The SFC has expressed doubts about the feasibility of achieving such high returns and the transparency of the programs.
In response to the accessibility of information about these schemes online, the SFC has taken proactive steps. On January 26, both the “Floki Staking Program” and “TokenFi Staking Program” were added to the SFC’s Suspicious Investment Products Alert List.
The SFC has cautioned investors about the risks associated with “staking” arrangements involving virtual assets. These arrangements could potentially be classified as unauthorized collective investment schemes, carrying elevated risks for investors.
In the event of losses, investors may have limited or no protection under the Securities and Futures Ordinance (SFO). Investors are advised to exercise caution, especially when encountering investment products that promise unrealistically high returns. The SFC emphasized its commitment to regulatory oversight and readiness to take appropriate actions in cases of legal breaches.
The SFC’s warning echoes a previous statement released on December 13, 2022, where it highlighted the risks associated with virtual asset investment schemes, particularly “staking” services. The SFC reminded investors and participants in virtual asset arrangements of the potential categorization of such schemes as Collective Investment Schemes (CIS).
In response to the SFC’s actions, the team behind the Floki platform addressed the situation in a live spaces session on X (formerly Twitter). They clarified that the SFC’s concerns primarily revolve around the remarkable performance of the staking programs. While unable to disclose specific details of their discussions with the SFC, the Floki team acknowledged partnering with a marketing agency for promotions and expressed their commitment to meeting Hong Kong authorities’ requirements.
About the author
Sharan Kaur Phillora’s thirst for knowledge has led her to study many different subjects, including NFTs and Blockchain technology – two emerging technologies that will change how we interact with each other in the future. When she isn’t exploring a new idea or concept, she enjoys reading literary masterpieces.
