Floki responds to Hong Kong regulator’s allegations
Floki, a meme-inspired cryptocurrency project, has taken steps to address the concerns raised by the Hong Kong Securities and Futures Commission (SFC) over its staking program. The SFC had previously classified Floki and its staking program as suspicious investment products.
“We have implemented a plan to resolve the issues that the Hong Kong legal framework touches on our staking program. As pointed out in the SFC’s statement, it seems that the high APY of Floki and TokenFi staking activities is their biggest concern,” Floki shared.
Staking refers to the process of locking up crypto assets in a blockchain network to earn rewards. The Floki developers posted a warning, blocking Hong Kong users from accessing their staking feature and suspending their offline marketing campaign in the region. As such, Floki will temporarily ensure that no Hong Kong users participate in its staking program.
We just published a response to the Hong Kong SFC’s notice about the Floki and TokenFi staking programs.
— FLOKI (@RealFlokiInu) January 29, 2024
In a blog post on Medium, the developers explained that the APY of Floki’s staking program is maintained by a unique reward system using the TOKEN coin of its sister project TokenFi. Floki adopted a decentralized token allocation strategy, putting the community at the center, without raising funds from VCs or private sales. Specifically, 54% of TokenFi’s supply is allocated to Floki stakers and 7% of the supply is allocated to TokenFi stakers. Through this, the project guarantees that the rewards will belong to those who trust the FLOKI ecosystem more than the venture funds. In four years, Floki and TokenFi stakers will receive rewards worth $156.7 million.
In a post in December 2022, the SFC warned investors about the risks and lack of oversight of crypto asset platforms. The agency advised users to be cautious before depositing money or engaging in staking on these platforms.
“While some crypto asset deals are often advertised as ‘deposits’ or ‘savings’, they are not regulated like bank deposits. Investors are not protected in any way,” the SFC said in the post.
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