The Securities and Futures Commission (SFC) in Hong Kong has issued a warning to users regarding the Floki memecoin project, labeling it as a “suspicious investment product.” On January 26, the SFC advised users within its jurisdiction to exercise caution when considering the Floki and TokenFi staking programs, as they promise annualized returns of 30% to over 100%. The SFC emphasized that investors should be wary of products that make claims that seem “too good to be true.”
In response to the SFC’s warning, Floki has blocked users based in Hong Kong from participating in its staking program. The regulator also pointed out that neither of these investment products are authorized in Hong Kong. The SFC further stated that unauthorized investment schemes offer limited to no protection under the Securities and Futures Ordinance (SFO), and investors could potentially lose all of their investments.
In a blog post on January 29, the creators of Floki revealed that they have been working with legal advisors to address any regulatory concerns related to the staking project. They have taken several measures, including placing warnings on the Floki and TokenFi staking sites to inform Hong Kong users that they are not eligible to participate. The team confirmed that, as of January 29, there is no record of Hong Kong users joining the staking programs. They also mentioned that they had already halted their offline marketing activities in Hong Kong prior to the launch of Floki in December 2023.
Addressing the SFC’s main concern about the high annual percentage yield (APY), the Floki team provided multiple explanations. They emphasized that the rewards are subject to volatility and are influenced by market dynamics. Additionally, they clarified that the value of staking rewards may fluctuate based on the market valuation of the token rewards.