The Securities and Futures Commission (SFC) of Hong Kong has recently alerted the public to the dangers of engaging in high-yield crypto investment schemes. Notably, the “Floki Staking Program” and similar ventures have been highlighted as potential risks due to their lack of official authorization.
Investor Alert: Unregulated Staking Services
The SFC has underscored that programs such as the “Floki Staking Program” and the “TokenFi Staking Program” are not permitted to operate for the Hong Kong populace. These services offer cryptocurrency staking with promised annual returns that are suspiciously high, sometimes exceeding 100%. The SFC urges investors to practice due diligence and be wary of these too-good-to-be-true claims.
Scrutiny Over Impractical Returns
Administrators of these staking services have failed to convince the SFC of their ability to achieve such high promised returns. In response, the commission has taken steps to inform the public by including these programs in the SFC’s Suspicious Investment Products Alert List as of January 26.
Understanding the Risks
The SFC has emphasized the high-risk nature of “staking” arrangements linked to virtual assets, which could be deemed unauthorized collective investment schemes. Such investments may offer little to no protection under the Securities and Futures Ordinance (SFO), leaving investors vulnerable to losing their entire capital.
Cautious Approach Recommended
Investors are advised to maintain vigilance, especially when encountering investment opportunities with unusually high returns. Previous warnings, including one from December 13, 2022, have reiterated the risks associated with virtual asset investment schemes, especially those involving “staking” services.
Regulatory Oversight and Enforcement
The SFC has affirmed its commitment to regulatory oversight and to taking necessary action against any breaches of the law, thereby protecting investors from fraudulent schemes.
Response from Floki
In response to the SFC’s concerns, the Floki team has indicated their cooperation, noting that they believed to have received the necessary approvals for their marketing initiatives. They are currently refraining from further marketing actions in Hong Kong, while seeking to comply with the local authorities’ directives.
Spotlight on Hong Kong’s Crypto Market Evolution
Amid these regulatory cautions, Hong Kong legislator Johnny Ng has advocated for the swift introduction of spot Bitcoin ETFs. This move aligns with international financial trends and aims to reinforce Hong Kong’s position within the global crypto sector.
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