Crypto NewsNewsTech News

Hong Kong’s SFC Issues Warning on Unregistered Staking Programs, Floki and TokenFi

Hong Kong’s Securities and Futures Commission (SFC) has added “Floki” and “TokenFi” staking programs to its “Suspicious Investment Products Alert List,” as announced on January 26.

The SFC highlighted that information about these programs is available online to the Hong Kong public but lacks proper authorization in the jurisdiction.

Unauthorized Programs and Lack of Registration

This decision was prompted by the providers failing to register the programs before offering them to investors in Hong Kong. Staking, a process involving earning rewards by committing tokens to secure a blockchain network, is the central focus of these unauthorized programs.

The SFC pointed out that both staking products claim annual rewards ranging from 30% to over 100% on staked tokens. However, the providers did not provide sufficient evidence to the regulator on how investors could achieve such high returns. They also insinuated that this is the same tactic Ponzi schemes employ.

Caution to Investors on Floki and Other ‘Schemes’

In a cautionary statement to investors, the SFC warned against participating in “staking” arrangements related to virtual assets.

Potentially unauthorized collective investment schemes pose high risks and provide limited protection under the Securities and Futures Ordinance (SFO). The regulator emphasized the likelihood of investors losing their entire investments in such schemes.

Furthermore, the SFC urged investors to exercise caution when encountering investment products that promise returns deemed “too good to be true.”

This alert aligns with the SFC’s ongoing efforts to enforce a licensing regime introduced in June, requiring crypto-related companies to obtain licenses before offering products to Hong Kong investors.This regulatory measure reflects the SFC’s commitment to cracking down on companies neglecting these licensing requirements.

Despite Hong Kong’s historically positive stance on crypto, recent incidents, such as the JPEX rugpull resulting in a $128 million loss for investors last year, have led regulators to implement stricter rules in the sector.

Exit mobile version