The Securities and Futures Commission (SFC) of Hong Kong has issued a warning to the public regarding two investment products associated with the Floki ecosystem, namely the “Floki Staking Program” and “TokenFi Staking Program.” The SFC has not authorized the public sale of these products in Hong Kong, despite their claims of offering annualized returns ranging from 30% to over 100%.
Staking is a process where users can earn rewards by contributing to the security of a blockchain. By staking cryptocurrency, users contribute to a staking pool, similar to depositing money into a savings account. This mechanism validates transactions and ensures the security and decentralization of the blockchain.
The SFC has raised concerns about the lack of convincing evidence provided by the governing body of these products regarding how they plan to achieve such high annualized returns. In response, the Floki team addressed the SFC’s concerns during their weekly live spaces on the X platform. They stated that the SFC’s only complaint is that the staking programs are performing too well.
While the Floki team could not disclose the specifics of their discussions with the SFC, they clarified that they had collaborated with a marketing agency for the promotion of the Floki Staking Program and TokenFi Staking Program. The team believed that they had received approval, as the agency secured media space. However, they were uncertain about the continuation of the marketing campaign in Hong Kong for the time being. The team assured investors that they would comply with all requirements set by the Hong Kong authorities through appropriate channels.
The SFC has made information about these two products available online to the Hong Kong public and included them on the Suspicious Investment Products Alert List on January 26, 2024. The SFC advises caution when engaging in staking deals involving digital assets, as they may constitute unauthorized collective investment schemes. These arrangements carry high risks, and investors may have limited protection under the Securities and Futures Ordinance, potentially resulting in a complete loss of investments.
Furthermore, the SFC has reiterated its commitment to enforcing regulatory standards and protecting investors from fraudulent schemes. Any violation of the law, including the promotion of unlicensed collective investment schemes, will be met with appropriate legal action.
In light of these developments, questions arise about the nature of Ethereum restaking and whether it represents a blockchain innovation or a risky endeavor that could potentially collapse.