.jpg)
The Securities and Futures Commission (SFC) today warned the public of suspicious investment products named “Floki Staking Program” and “TokenFi Staking Program”, both of which involve cryptocurrency staking services and claim to offer high annualised return targets of 30% to over 100%.
The two products have not been authorised by the SFC for offering to the Hong Kong public (Notes 1 and 2). The administrator of the two products has also not been able to demonstrate to the SFC’s satisfaction how the high annualised return targets could be achieved.
The SFC notes that information regarding these two products and the products themselves are accessible to the Hong Kong public via the internet. This led the SFC to post the two products and their related information on the SFC’s Suspicious Investment Products Alert List on 26 January 2024.
The SFC wishes to warn investors of “staking” arrangements relating to virtual assets. As these arrangements could amount to unauthorised collective investment schemes and may be highly risky (Note 3), their investors have very limited or no protection under the Securities and Futures Ordinance (SFO) and they may lose all their investments. Investors should also be cautious about investment products that claim to offer “too-good-to-be-true” returns and stay vigilant when making investment decisions.
The SFC will take all appropriate actions where there is any breach of the law.
Notes:
- Each of the two products displays characteristics of a collective investment scheme (CIS) as defined in section 1 of Part 1 of Schedule 1 to the SFO. It is an offence under section 103 of the SFO for a person to issue, whether in Hong Kong or elsewhere, an advertisement, invitation or document which is or contains an invitation to the Hong Kong public to acquire an interest in or participate in a CIS, unless the SFC has authorised the issue or an exemption applies. In general, CIS must be sold by an intermediary licensed by or registered with the SFC. Unauthorised CIS may generally be sold to professional investors only.
- It is an offence under section 114 of the SFO for a person to carry on, or hold himself out as carrying on, a business in a regulated activity (which will include promoting interests in a CIS) without a licence where required. It is also an offence under section 115 of the SFO for a person to actively market, whether in Hong Kong or from a place outside Hong Kong, to the Hong Kong public any services that the person provides, and such services, if provided in Hong Kong, would constitute a regulated activity.
- In its Statement on virtual asset arrangements claiming to offer returns to investors issued on 13 December 2022, the SFC reminded investors of the risks associated with virtual asset arrangements (including “staking” services) and also the persons engaging in these arrangements that they could amount to a CIS.
