The Floki Inu cryptocurrency team has decided to halt its Floki and TokenFi staking programs in Hong Kong following a warning from the Securities and Futures Commission (SFC), which listed them as “suspicious investment products.”
This response comes after the SFC warned users about the Floki Staking Program and TokenFi Staking Program, claiming to offer annual returns ranging from 30% to over 100%. The SFC emphasized that neither of these products has received authorization for offering to the Hong Kong public.
Floki and TokenFi Staking Marketing Campaign Not Approved by the SFC
The team asserted that the SFC’s main concern was the exceptional performance of the staking programs. Although the team could not provide details about their discussions with the SFC, they clarified that a marketing agency initiated the promotional campaigns for the Floki Staking Program and TokenFi Staking Program. The team believed they had received campaign approval, which included securing media space.
Floki Inu’s team, however, could not confirm whether the marketing campaign would continue in Hong Kong. They assured investors they would navigate the appropriate channels to meet all requirements with the Hong Kong authorities.
In an official statement, Floki Inu announced that it has taken steps to prevent users from Hong Kong from accessing the staking programs and has displayed warnings on its website to inform Hong Kong users about their ineligibility to participate.
They also placed a suspension on their offline marketing campaign in the region. As a result of these actions, the team affirms that no Hong Kong users have joined the staking program to date. It wrote,
“As a responsible community, we will continue to implement those measures to prevent Hong Kong users from joining the staking program until the relevant regulatory issues have been resolved. We can confirm that, as of today, to the best of our knowledge, there is no record of Hong Kong users having joined the staking program.”
Notably, staking involves users earning rewards by contributing to blockchain security, similar to depositing money into a savings account.
Floki Token Staking Programs Included in Hong Kong SFC Alert List
In defense of their high-yield staking programs, the Floki team appears to stand by their initiatives despite the regulatory concerns. They expressed disagreement with the decision to single out the staking programs, stating,
“If, as it appears, a decision to single out the staking programs was made solely because of the high APY of our staking programs stated in social media posts and as moved by market forces, as explained above, then we will have to respectfully disagree.”
The Floki Inu team explained that the potential for high returns in their staking programs is due to the absence of funding from venture capital firms or large presales, which typically require allocating substantial portions of the supply to sponsors. Instead, most of the token supply was given to users who staked Floki.
The Floki team detailed in the Medium post that the high annualized percentage yield (APY) of Floki’s staking program is sustained by a unique reward system utilizing $TOKEN from its sister project, TokenFi. They highlighted the market-responsive APY, a decentralized and community-centric allocation strategy, and the absence of fundraising from venture capitalists (VCs) or presales as factors contributing to the program’s performance.
Addressing concerns about volatility in user rewards, the team clarified that these rewards are subject to the market price of TOKEN, the utility token of Floki’s sister project TokenFi, which depends on market forces beyond their control. The staking program rewards users with TOKEN instead of minting new supplies.
The team asserted that users are not confused about how the staking program works, emphasizing their lack of control over staked assets, staking contracts, or rewards. The decision to cease staking programs in Hong Kong reflects the team’s commitment to regulatory compliance and user protection, as outlined in the statement below.
We just published a response to the Hong Kong SFC’s notice about the Floki and TokenFi staking programs.
Our response highlights our thoughts about their notice, why $FLOKI and $TOKEN can sustainably have an impressively high APY, and our plans going forward!… pic.twitter.com/YfpnnDMhfq
— FLOKI (@RealFlokiInu) January 29, 2024
On January 26, 2024, the SFC included both products and their relevant details on the Suspicious Investment Products Alert List. Investors are cautioned about staking deals involving digital assets, which may constitute unauthorized collective investment schemes, posing high risks with minimal protection under the Securities and Futures Ordinance.
Credit: Source link