Hong Kong's Securities and Futures Commission (SFC) has blocked users from participating in dog memcoin project Floki, calling them “suspicious investment products.”
On January 26, the SFC warned users in its jurisdiction about the Floki and TokenFi staking programs, citing their promise of annual returns ranging from 30% to over 100%. The SFC says investors should be wary of products that promise returns that are “too good to be true”.
Floki responded to a warning from the Hong Kong Securities and Futures Commission (SFC) by blocking Hong Kong users from joining its betting program.
The regulator also emphasized that none of the investment products were authorized in Hong Kong. The SFC added that unauthorized investment schemes are limited by the lack of protection under the Securities and Futures Regulation (SFO) and that investors “could lose their entire investment”.
We just published a response to the Hong Kong SFC's notice about the Floki and TokenFi staking programs.
— FLOKI (@RealFlokiInu) January 29, 2024
The Floki team responded to the regulator's warning by taking a number of measures, including blocking access to the program for users from Hong Kong. In a blog post dated January 29, the people behind Memcoin announced that they were working with its legal counsel to clarify and resolve potential regulatory issues with the staking project.
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The team said they took several steps, including posting warnings on betting sites Floki and TokenFi, to warn Hong Kong users that they were not eligible to join. They wrote:
“As a responsible community, we will continue to implement these measures to ensure that Hong Kong users are unable to join the betting program until relevant regulatory issues are resolved.”
The team also confirmed that as of January 29, there were no reported cases of Hong Kong users joining staking programs. The Floki team added that they have already paused offline marketing in Hong Kong ahead of its December 2023 launch.
The Floki team responded to the SFC's main concern about the high annual percentage yield (APY) by offering several explanations. They emphasized that “rewards are volatile and dependent on market dynamics.” Additionally, they explained that the value of staking rewards may fluctuate depending on the market valuation of token rewards.