The Hong Kong Securities and Futures Commission (SFC) has issued a warning statement, alerting the public to be wary of high-yield cryptocurrency investment schemes, including the “Floki Stake Program” and the “TokenFi Stake Program.”
SFC warns investors
According to a recent announcement, the Hong Kong Securities and Futures Commission (SFC) clarified that both the “Floki Stake Program” and the “TokenFi Saging Program” lack a license to offer to the public in Hong Kong.
The regulator says both offers involve cryptocurrency stake services that it claims offer significantly high annual returns, ranging from 30% to more than 100%, so investors should exercise caution and diligence in light of these potentially shady schemes.
In addition, the administrator overseeing these products was unable to satisfy the SFC regarding the potential for achieving the high annual revenue targets.
By highlighting the accessibility of information about these products to the Hong Kong public online, the FSC has taken proactive measures. On 26 January, the FCA added both products and details about them to the FCA's Suspicious Investment Products Alert List.
Expressing concern, the SEC has warned investors about “staking” arrangements associated with virtual assets, citing their potential classification as unauthorized collective investment schemes and the inherent high risks.
The regulator says these investment products carry high risks and, as such, investors may find themselves with limited or no protection under the Securities and Futures Act (SFO), putting them at risk of losing their entire investment.
The Authority advised investors to be cautious, especially when faced with investment products that promise returns that seem “too good to be true,” and urged vigilance in making investment decisions.
It is worth noting that in a statement issued on 13 December 2022, the SFC reiterated its warning to investors regarding the risks associated with virtual asset investment schemes, specifically highlighting “staking” services.
The SEC emphasized that such arrangements can be classified as collective investment schemes (CIS), directing this reminder to both investors and individuals participating in such virtual asset arrangements.
In line with its commitment to regulatory oversight, the Supreme Financial Supervisory Committee affirmed its readiness to take appropriate measures in the event of any violations of the law.
Floki responds
In a summary of the live spaces on X (formerly Twitter), the Floki team responded to developments related to the SFC. The cryptocurrency platform stressed that the SFC's primary concern revolves around the impressive performance of its staking software.
Unable to reveal details regarding their discussions with the SFC, Floki explained that they have partnered with a marketing agency to launch promotions for the Floki Stake Program and the TokenFi Stake Program. The agency secured a media appearance, and Floki's team was under the impression they had the approval.
The Floki team declined to comment on the continuation of the marketing campaign in Hong Kong at the present time. They reassured investors of their commitment to navigate through all appropriate channels to meet the requirements set by the Hong Kong authorities.
Furthermore, the Supreme Financial Supervision Committee reiterated its commitment to enforcing regulatory standards and protecting investors from fraudulent schemes.
Hong Kong legislator supports adoption of Bitcoin exchange-traded fund
In related news, Hong Kong lawmaker Johnny Ng called on the government to introduce spot exchange-traded funds (ETFs) for bitcoin (BTC) immediately.
This decision follows the recent approval of similar products in the United States
Expected to debut by mid-2024, Hong Kong's first spot cryptocurrency ETFs undergo review by the Securities and Exchange Commission and the Monetary Authority.
The move is seen as an important step towards aligning with global financial trends and strengthening Hong Kong's position in the cryptocurrency industry. The rapid adoption of spot bitcoin ETFs in Hong Kong could also have a profound impact on the region, industry insiders and experts have highlighted.
The introduction of ETFs is pivotal in aligning regulatory and industry expectations on controls and compliance, paving the way for this reality in the Asian market, where Hong Kong aspires to be a proving ground for the wider region.
