The Hong Kong Securities and Futures Commission (SFC) has cautioned users against staking in the dog-themed meme coin project, Floki, describing it as “suspicious investment products.”
The SFC warned users within its jurisdiction on January 26 regarding the Floki and TokenFi staking programs, highlighting their guaranteed annualized returns ranging from 30% to over 100%.
As per the SFC, investors ought to exercise prudence when considering investments that purport to deliver returns that appear “extremely favorable.”
By preventing Hong Kong-based users from enrolling in its staking program, Floki reacted to the Hong Kong Securities and Futures Commission (SFC) warning.
Additionally, the regulator emphasized that both investment products lacked authorization in Hong Kong. The SFC further stated that its Securities and Futures Ordinance (SFO) provides minimal to no protection against unauthorized investment schemes and that investors “may lose all of their investments.”
The developers of the memecoin disclosed in a January 29 blog post that they have been collaborating with legal counsel to investigate and resolve any possible regulatory concerns regarding the staking initiative.
The team stated that they have implemented warnings on the Floki and TokenFi staking sites to inform Hong Kong users that they are ineligible to participate. They penned:
“As a responsible community, we will continue to implement those measures to prevent Hong Kong users from joining the staking program until the relevant regulatory issues have been resolved.”
Additionally, the team verified that there are no records of Hong Kong users participating in staking programs as of January 29. They further stated before the product’s December 2023 release, the Floki team discontinued its offline marketing efforts in Hong Kong.
The Floki team explained the SFC’s principal concern regarding the high annual percentage yield (APY). They emphasized that “market dynamics and volatility affect the rewards.” Additionally, they specified that the market valuation of token rewards could cause fluctuations in the value of staking rewards.
