In a significant development, the Securities and Futures Commission (SFC) of Hong Kong has issued an alert about the high-yield staking products of Floki, labeling them as “suspicious” and unapproved. This move has prompted an immediate response from Floki, leading to the cessation of its Floki and TokenFi staking programs in Hong Kong.
Prompted by the SFC’s concerns, Floki has implemented measures to restrict access for Hong Kong users to these staking programs. The cryptocurrency team has also updated its website to clearly inform Hong Kong residents of their ineligibility to participate in these programs. Additionally, Floki has halted its planned offline marketing campaign in Hong Kong, initially set for December 2023.
The warning from the SFC, released last Friday, specifically targets the Floki Staking Program and TokenFi Staking Program. These programs are known for their attractive promises of annual returns ranging between 30% and over 100%. The SFC pointed out that these products have not been authorized for offering to the public in Hong Kong.
In response, the Floki team has defended its high-yield staking programs, arguing that the high returns are feasible mainly because the programs are not reliant on venture capital or extensive presales. Such financial backing typically requires allocating a significant portion of the supply to sponsors. Instead, Floki has allocated a majority of its token supply directly to stakers.
Floki has also clarified the mechanics of user rewards, which are influenced by the market value of TOKEN, the utility token of Floki’s affiliate project, TokenFi. According to the team, the price of TOKEN is subject to market forces outside of their control. They emphasized that rewards in the Floki staking program are given in TOKEN, not by minting new tokens.
The Floki team asserts that there is no confusion among users regarding the operation of the staking program, emphasizing their lack of control over the staked assets, staking contracts, or the rewards process.
Despite the ongoing controversy and regulatory scrutiny, the Floki team declined to provide additional comments, leaving the cryptocurrency community in anticipation of how staking programs will evolve in response to increased regulatory oversight.
