Embattled Nigerian cryptocurrency exchange Patricia announced on Aug. 18, that it was converting its users’ lost funds to the new Patricia Token (PTK). However, users can only access their PTK when the company makes profits.
- In PTK’s white paper, the company stated that it will convert the outstanding bitcoin, naira and USD balances of its users to the new token.
- It added that the release of the tokens, however, would be governed by a smart contract and based on how much profit the company makes. Increasing balances will align with the company’s monthly earnings.
- Upon its release, PTK will only be convertible to USDT, which can be exchanged for fiat and other assets. Direct conversion of PTK to fiat is restricted.
- The move to repay its debts based on the company’s profit casts doubts about the repayment timeframe.
- In addition, a security breach of such magnitude potentially erodes user confidence in the security of Patricia as an exchange. This could see them move their funds elsewhere, reducing Patricia’s volumes and hurting its chances of making profits through transaction fees.
What was said
On how it plans to make a profit, Patricia’s CEO, Hanu Fejiro, told TechCabal:
“Our OTC Desk has been fully operational, and it is growing and bringing in revenue. We are totally confident in the redemption of Patricia tokens and that we will be able to pay our customers with the proceeds from our operations and our fundraising efforts.”
- After freezing withdrawals, Patricia disclosed to users that it had fallen victim to a security breach resulting in the loss of up to $2 million worth of bitcoin, naira, and USD assets under its custody.
- A TechCabal exclusive citing undisclosed sources to the company alleged that the hack occurred as far back as 2022, long before the company notified its users.
- The exchange has tried several measures to overcome the hurdle, including repeatedly freezing withdrawals on its app, launching an entirely new app and reportedly laying off as much as 80% of its staff.
- Last week, Patricia announced that it was launching the Patricia Token pegged one-to-one with the USD. It added that it converted its users’ outstanding bitcoin, naira and USD balances to the token.
- In the recent Mariblock Weekly newsletter, Lead Editor Oluwaseun Adeyanju discusses the significance of not overlooking this event.
- He emphasizes that the African ecosystem must address this matter, advocating for the initiation of self regulatory organizations (SROs) as a promising first step.