- The Hong Kong Securities and Futures Commission (SFC) issued a warning regarding two Floki staking programs promising high returns without proper authorization.
- The SFC said the Floki Staking Program and TokenFi Staking Program have not demonstrated how they will achieve claimed annualized returns from 30% to over 100%.
- The SFC cautions that unauthorized crypto staking products often have minimal legal protections and high risks like potential total loss of funds.
The Hong Kong Securities and Futures Commission (SFC) has warned about two potentially risky Floki-affiliated products offering staking services with unverified high returns.
Background on the Floki Staking Programs
The SFC cautioned the public about the Floki Staking Program and the TokenFi Staking Program, which are connected to the Floki ecosystem.
The programs offer staking services and claim to provide annualized returns from 30% to over 100%. However, the SFC emphasized that neither product is authorized for public sale in Hong Kong.
Staking allows users to earn rewards for contributing to a blockchain’s security. When users stake crypto, they provide assets to a staking pool, like depositing money into a savings account. This validates transactions through proof-of-stake, ensuring decentralization.
Concerns Over Claimed Returns
The SFC noted that the entities behind these two staking products have not convincingly demonstrated how they will achieve such high claimed returns.
In a livestream, the Floki team said the SFC’s only issue is that the staking programs perform “too well.” While not providing specifics, Floki indicated it had partnered with a marketing agency to promote the programs and believed approvals were in place.
Floki assured investors it would fulfill all requirements with Hong Kong authorities but could not confirm if marketing would continue there for now.
Investor Warnings from the SFC
The SFC cautions that staking arrangements involving digital assets may be unauthorized investment schemes with minimal legal protections and high risks, including potential total loss.
It also added the two Floki-connected products to its list of suspicious investment products. The SFC remains committed to enforcing standards and protecting investors from fraudulent schemes.
The situation highlights the ongoing regulatory uncertainty surrounding crypto-staking products. While attractive yields may entice investors, thorough due diligence is essential.