Hong Kong Issues Red Alert on Floki and TokenFi: Details
Hong Kong’s Securities and Futures Commission (SFC) announced it has added “Floki” and “TokenFi” staking programs to its “Suspicious Investment Products Alert List”‘ on Friday, January 26.
The SFC pointed out that the information on both products “is accessible to the Hong Kong public via the internet” but is not authorized in the jurisdiction.
Unauthorized Programs
According to SFC, the decision was made after the providers of the products failed to register them before offering them to Hong Kong-based investors.
For the uninitiated, staking involves earning rewards by committing tokens to help secure a blockchain network.
According to the SFC, both staking products promise annual rewards from 30% to over 100% on staked tokens, but their providers failed to demonstrate to the regulator how investors can achieve this high return.
SFC Warns of “Too Good to Be True” Investment Programs
“The SFC wishes to warn investors of “staking” arrangements relating to virtual assets. As these arrangements could amount to unauthorised collective investment schemes and may be highly risky, their investors have very limited or no protection under the Securities and Futures Ordinance (SFO) and they may lose all their investments,” the regulator warned.
SFC also urged investors to be cautious when investing in products that offer what it describes as “too-good-to-be-true” returns.
Last June, the SFC launched a licensing regime requiring crypto-related companies to obtain licenses before offering their products to investors in Hong Kong. The latest development underscores SFC’s effort to crackdown on companies not following these requirements.
In recent years, Hong Kong has maintained a friendly stance on crypto. However, since the JPEX rugpull that led to investors losing roughly $128 million last year, regulators in the country have been implementing stricter rules around the sector.
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