Hong Kong Financial Authorities Issues Warning on Unauthorized Cryptocurrency Staking

The Hong Kong Securities and Futures Commission (SFC) has taken a major step to protect investors and advance financial stability by issuing a warning against (what it termed) high-risk, unlicensed cryptocurrency staking schemes.

These schemes, which offer annualized returns of between 30% and over 100% to investors, have been reported by the SFC as possibly fraudulent and unlicensed. On January 26, SFC included  TokenFi and Floki on their Suspicious Investment Products Alert List (SIPAL) while conducting more investigations into their operations. 

The SFC issued its warning in response to the growing number of cryptocurrency staking schemes that prey on unsuspecting investors with alluring promises of wealth but lack the required regulatory clearances. As a preventative precaution against participating in staking transactions involving digital assets, the warning is extended to the entire public in Hong Kong.

SFC Identifies, Lists Unlicensed Staking Schemes, Warns The Public

Lacton Muriuki, a market watcher with CryptoPolitan, explained that the practice of “crypto staking,” in which users deposit a specific quantity of bitcoin in a blockchain network to fund its operations in exchange for incentives, has grown in popularity recently.

Muriuki added that the increase in interest has also drawn the attention of dishonest people looking to take advantage of unsuspecting investors. The SFC has identified unlicensed staking schemes that frequently offer attractive profits that surpass conventional investing options.

According to the statement by SFC, investors looking for high-yield options usually find the promise of annualized returns that range from 30% to over 100%, which most investors find particularly enticing. 

The regulatory authority has stressed that these programs operate without the required authorization and supervision, which puts investors at risk of fraud, money loss, and other issues related to unregulated operations.

Floki Team Responds to SFC Comments, Hints on Investors Education 

The SFC in Hong Kong has taken the initiative to address the dangers and difficulties brought on by the changing Bitcoin ecosystem. SFC says it adopts a more prudent approach that complies with global regulatory standards, which also balances investor protection and innovation.

SFC also mentioned that the market draws in a broad spectrum of players, including retail investors. Therefore, raising awareness of the possible dangers and drawbacks of high-yield investment programs, particularly those operating in a regulatory grey area, is critical.

Responding to the SFC warning, the team at Floki did a weekly review of a live program on the X platform. In their way of defending the staking programs, the team stated that the major issue SFC has with the staking programs is the will to perform optimally.

While the team accepted that they are working with other marketing agencies to promote TokenFi Staking and the Floki Staking Program, they insisted that they’d gotten approval from the SFC. Unfortunately, the team at Floki did not provide precise details on the meeting with SEC as of press time. The team had made an official statement assuring their investor of their commitment to addressing every regulatory guideline-mandated by the country’s authorities.

Authorities Issues More Warning, Asks Investors to Do More Research 

SFC had recommended that investors do their research, confirm the validity of staking programs, and be wary of offers that look too good to be true. In a separate statement, SFC urged cryptocurrency investors to apply caution with any firm of staking program.

The authority added that such programs may be operating some unauthorized investment programs that usually come with huge risks. Under Hong Kong’s Securities and Futures Ordinance (SFO), investors with unprotected investments risk losing all of it. As of press time, the Floki management said they are still deciding if their marketing activities will continue in Hong Kong.

They also promised to go through every legal channel to ensure its product prevails in the country. Meanwhile, recent observation shows that Hong Kong has been paranoid since the JPEX rugpull, which saw hundreds of investors lose about $128 million last year in 2023.

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