The team behind the Floki Inu cryptocurrency has opted to temporarily suspend its Floki and TokenFi staking initiatives in Hong Kong following a cautionary notice from the Securities and Futures Commission (SFC), which flagged them as “suspicious investment products.”
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Floki and TokenFi staking temporarily suspended in Hong Kong
This move follows the SFC’s advisory to users regarding the Floki Staking Program and TokenFi Staking Program, purportedly offering annual returns ranging from 30% to over 100%.
The SFC emphasized the lack of authorization for these products to be offered to the Hong Kong public. The team clarified that the SFC’s primary concern was the exceptional performance of the staking programs.
While details of their discussions with the SFC remain undisclosed, the team revealed that a marketing agency initiated the promotional campaigns for the Floki Staking Program and TokenFi Staking Program. They believed they had received approval for the campaigns, including securing media space.
However, the Floki Inu team couldn’t confirm the continuation of the marketing campaign in Hong Kong and assured investors that they would comply with all requirements through proper channels with the Hong Kong authorities.
Floki Inu Announcement
In an official statement, Floki Inu announced measures to restrict access to the staking programs for users from Hong Kong, displaying warnings on its website about ineligibility.
The team also suspended its offline marketing campaign in the region, affirming that, to the best of their knowledge, no Hong Kong users had joined the staking program as of the current date.
Staking involves users earning rewards by contributing to blockchain security, akin to depositing money into a savings account.
Floki Token Staking Programs Listed in Hong Kong SFC Alert
Despite regulatory concerns, the Floki team defended their high-yield staking programs, expressing disagreement with singling out these initiatives. They contended that the decision seemed driven by the high Annual Percentage Yield (APY) mentioned in social media posts, attributing it to market forces.
Explaining the potential for high returns, the team highlighted their unique reward system using $TOKEN from their sister project, TokenFi. They pointed to market-responsive APY, a decentralized allocation strategy, and the absence of VC or presale funding as factors contributing to the program’s performance.
Concerns regarding Reward Volatility
Addressing concerns about reward volatility, the team clarified that rewards are tied to the market price of TOKEN, TokenFi’s utility token, subject to market forces. Staking program rewards come in TOKEN instead of creating new supplies.
The team emphasized that users understand the staking program’s mechanics and highlighted their lack of control over staked assets, staking contracts, or rewards. The decision to suspend staking programs in Hong Kong reflects their commitment to regulatory compliance and user protection, as outlined in their statement.
On January 26, 2024, the SFC included both products on the Suspicious Investment Products Alert List, cautioning investors about staking deals involving digital assets that may constitute unauthorized collective investment schemes, posing high risks with minimal protection under the Securities and Futures Ordinance.
Conclusion
To conclude, in response to regulatory concerns from the Securities and Futures Commission (SFC), the Floki Inu team has temporarily suspended Floki and TokenFi staking initiatives in Hong Kong. The decision reflects their commitment to compliance, and user protection, and addresses SFC’s cautionary stance, highlighting the evolving landscape of cryptocurrency regulations.
Note: It’s a research based article not a financial advice
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