Nigeria-based trust DLM Trust Company has withdrawn as the escrow trustee for Patricia Technologies. The company cited the exchange’s breach of the escrow agreement terms and misrepresentation to the media as reasons for the cancellation.
In a press release shared with Mariblock, DLM Trust said its escrow agreement with Patricia, signed on Oct. 18, clearly stated that the exchange was merely employing DLM’s services as an escrow trustee.
- The agreement was not to be construed as a partnership, the company said.
- In its press release, DLM Trust Company’s managing director, Ololade Razaq, said:
“DLM Trust Company wishes to clarify that the business relationship with Patricia Technologies is not a ‘partnership,’ as falsely portrayed, but a mere escrow appointment.”
- She added:
“DLM Trust Company, in accordance with clause 20 of an agreement signed between DLM Trust Company and Patricia Technologies, which stated that the agreement should not be construed as a partnership by any of the parties, announces its termination as escrow trustee to Patricia Technologies.”
Be smart: An escrow trust is a financial arrangement where a third party, often a trusted company or individual, holds funds or assets on behalf of two parties involved in a transaction. The assets are kept in escrow until all the terms and conditions of the transaction are met, ensuring a secure and transparent exchange between the parties involved.
- The latest issue sprung following a now-deleted press release supposedly issued by DLM Trust on the financial news website Nairametrics (archived link here).
- Parts of the deleted press release read:
“We are delighted to announce a strategic partnership with Patricia Technologies Limited to oversee the management and disbursement of customer deposit repayments. […]
“We are honored to be entrusted with this essential role, ensuring the smooth and secure return of deposits to Patricia’s esteemed customers. […]
“DLM Trust and Patricia Technologies Limited share a mutual dedication to providing excellent financial services, and we are excited about this partnership, which will help facilitate the prompt and efficient return of customer deposits. [...]
“We look forward to a successful collaboration and the opportunity to serve Patricia Technologies Limited and its customers.”
- In the call with Mariblock, a DLM Trust spokesperson denied releasing the statement, saying it neither has any affiliations with Patricia Technologies nor authorized any press release announcing a partnership.
- The spokesperson added that DLM’s conversations with Patricia have been entirely through an intermediary — not directly with the crypto exchange.
“There is a third party between us, a mediator, whom they [Patricia] had contracted to speak to us because we did not deal directly with them,” the DLM spokesperson said. “The mediator had gotten Patricia’s approval to draft the press release ...the journalist from Nairametrics said the agent from Patricia had called him that the press release was from us.”
- DLM Trust alleged that Patricia had knowingly contravened the terms of their agreement by publishing a misleading press release. The escrow provider added that the crypto company was trying to ride DLM’s goodwill to launder its public image by claiming a partnership when it was, in fact, a mere company-client relationship.
- The company confirmed to Mariblock that it had never met with Patricia and only interacted with the exchange via the intermediary. After DLM Trust had confronted the exchange on the misleading press release, Patricia refused to walk back on its claim, the company said.
- Following an in-house consultation, DLM Trust Company revoked its agreement with Patricia.
Patricia did not respond to a request for comment. However, in a press release published Oct. 26, the crypto company said it was shocked by DLM Trust’s decision to cancel the agreement, insisting that the exchange had not breached any agreement terms between the parties.
- Patricia added that it had transferred an undisclosed amount of money to the trust company to set the repayment process in motion, and it may be seeking redress in court if the company does not repeal its allegations.
- The exchange plans to continue with the repayment plan scheduled on Nov. 20 despite its trustee’s withdrawal.
- Patricia’s CEO, Hanu Fejiro, said:
“This development [DLM’s termination of the agreement] came as a surprise as we were not informed before their public statement of withdrawal. However … the repayment plan we initiated along with DLM Trustees a few days ago will go on as scheduled.”
- Earlier this year, Patricia announced to its customers that it was the victim of a security breach that compromised its bitcoin and naira assets. The company lost $2 million to the incident.
- Faced with insufficient liquidity, the company stopped withdrawals on its platform.
- In April, Patricia launched its new app, Patricia Plus, with withdrawals enabled. The ensuing rush to transfer assets to other wallets and the exchange’s inability to keep up led to the freezing of withdrawals again.
- Two months ago, Patricia announced that it was converting its customers’ outstanding bitcoin and naira balances into its newly launched Patricia Token (PUTX). It neither secured its customers’ permission beforehand nor disclosed how the token was issued or if it had enough liquidity to issue the token.
- The company said the tokens were debt securities redeemable only when the company started to make a profit.
- Earlier this month, Fejiro said in a town hall meeting with customers that the company had secured an undisclosed amount in funding to pay off “a large chunk” of its debts.