• 19 June, 2024

Hong Kong Regulators Issue Warning on Suspicious Crypto Staking Programs

In a recent announcement by the Chinese reporter, Colin Wu, the Hong Kong Securities and Futures Commission (SFC) has raised a red flag on two cryptocurrency staking programs – the “Floki Staking Program” and the “TokenFi Staking Program.” Both programs have been deemed questionable investment products, primarily due to their claims of offering astonishingly high annualized returns ranging from 30% to over 100%.

The SFC has clearly stated that neither of these investment products has received authorization for offering their services to the Hong Kong public. This means that they are operating without the necessary regulatory approval, which is a clear violation of Hong Kong’s Securities and Futures Ordinance (SFO).

Moreover, the administrators of these staking programs have failed to provide satisfactory explanations to the SFC regarding the methods they employ to generate such high annualized returns. This lack of transparency has further fueled concerns about the legitimacy of these offerings.

In response to these concerns, the SFC has taken the step of adding both the “Floki Staking Program” and the “TokenFi Staking Program.” These were added to its Suspicious Investment Products Alert List, cautioning the public against getting involved with these products. Floki and TokenFi are trading at $0.00002935, and $0.02501 respectively. Floki is down 3.1% during this press and has a market cap of $291,479,993 and is ranked #182 on CoinGecko.

The SFC’s warning extends beyond these specific programs and serves as a broader caution to investors about the risks associated with “staking” arrangements involving virtual assets. They highlight that such arrangements can potentially constitute unauthorised collective investment schemes, leaving investors with limited or no protection under the law, and they may risk losing their entire investments.

The commission also emphasized the need for investors to exercise caution when confronted with investment products that promise “too-good-to-be-true” returns. These claims often serve as red flags, and potential investors should remain vigilant and perform thorough due diligence before making any investment decisions.

The SFC has made it clear that it will take appropriate actions against anyone found in breach of the law, which includes issuing unauthorised advertisements or invitations to the Hong Kong public and carrying on regulated activities without the required licenses.

The SFC’s latest warning serves as a timely reminder of the potential risks lurking in the cryptocurrency and staking space. Investors are strongly advised to exercise utmost caution, verify the legitimacy of investment products, and seek advice from licensed professionals when exploring opportunities in this rapidly evolving landscape. Failure to do so may result in significant financial losses and legal consequences.

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