The Floki Inu cryptocurrency team has halted the Floki and TokenFi staking programs in Hong Kong after the local regulator flagged them as “suspicious investment products,” according to its statement.
In a blog after published today, Floki said it has taken measures to prevent Hong Kong users from accessing the staking programs, and has posted warnings on its website notifying Hong Kong users of their ineligibility to participate to participate in the programs. Floki added that it was suspending its offline marketing campaign in the city ahead of its planned launch in December 2023.
Floki’s comment comes in response to the Securities and Futures Commission’s warning released Friday. The SFC warned the public of Floki Staking Program and TokenFi Staking Program – both of which claim to offer annual returns of 30% to more than 100%, according to the notice.
“The two products are not authorized by the SFC for offer to the public in Hong Kong,” the SFC added.
In response to regulator concerns, the Floki team appears to be sticking to its high-yield stakes programs. “If, as it appears, a decision to pull out the staking programs was made solely due to the high APY of our staking programs as stated in social media posts and as moved by market forces as explained above, then we will must respectfully disagree.”
The Floki team noted that the programs in question could generate high returns, mainly because they were not funded by venture capital firms or large pre-sales, which would require allocating a significant portion of the offering to sponsors. Instead, most of the token supply was given to users who staked Floki.
Floki also explained that the volatility in user rewards occurs because they depend on the market price of TOKEN, the utility token of Floki’s sister project TokenFi. The price depends on market forces beyond their control, the team said, adding that Floki’s staking program rewards strikers with TOKEN instead of minting new supplies.
“We do not believe there is any confusion among users about how the wagering program works,” the team continued, saying it has no control over the assets staked, wagering contracts or the rewards.
The Floki team did not provide further comment at the request of The Block.
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