The Hong Kong Securities and Futures Commission recently raised concerns about Floki, cautioning investors about its high-yield staking products, which they deemed “suspicious” and unauthorized. Floki’s team countered by explaining that they achieve these high returns by giving most of the token supply to stakers.
The team behind the Floki Inu cryptocurrency has stopped offering staking programs for Floki and TokenFi in Hong Kong. They made this decision after the local regulator labeled these programs as “suspicious investment products.” This information comes from a statement released by the Floki Inu team.
Floki Inu’s Response to Regulatory Warning
In a recent blog post, Floki Inu addressed measures taken following a warning from the Hong Kong Securities and Futures Commission (SFC). The company stated that it had blocked users from Hong Kong from accessing its staking programs and added warnings on its website to inform Hong Kong users of their ineligibility to participate. Additionally, Floki mentioned that it had halted its offline marketing campaign in the city before its planned launch in December 2023.
The SFC’s warning, issued last Friday, specifically mentioned Floki’s Staking Program and TokenFi Staking Program. Both programs claim to offer annual returns ranging from 30% to over 100%, according to the notice. The SFC emphasized that these products lacked authorization for offering to the Hong Kong public.
In response to the regulator’s concerns, the Floki team defended its high-yield staking programs. They indicated that if the decision to single out these programs was due to their high Annual Percentage Yield (APY) and market traction, then they respectfully disagreed with the regulator’s stance.
Explanation of Floki’s Staking Program Mechanics
The Floki team provided insight into why their staking programs yield high returns. They explained that unlike programs funded by venture capital firms or large presales, which require allocating significant portions of the supply to sponsors, Floki’s programs allocate most of the token supply to users who stake Floki.
Furthermore, Floki clarified that the volatility in user rewards is due to their dependence on the market price of TOKEN, the utility token of Floki’s sister project, TokenFi. This price, they emphasized, is influenced by market forces beyond their control. Additionally, Floki’s staking program rewards users with TOKEN rather than generating new supplies.
The team stressed that there should be no confusion among users regarding how the staking program operates. They asserted that they have no control over the staked assets, staking contracts, or the rewards distributed.
Important: Please note that this article is only meant to provide information and should not be taken as legal, tax, investment, financial, or any other type of advice.
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