Patricia, a Nigerian crypto exchange, has launched its own token called Patricia token (PTK). The company claims that PTK is a stablecoin that equals one US dollar ($1 = 1PTK). Customers with bitcoin (BTC) or naira balances on the platform will receive PTK instead.
The exchange also announced that it will move its operations to a new platform called Patricia Plus app. This announcement comes after Patricia revealed that it suffered a breach that resulted in the loss of funds. The company said no customer funds were affected, but users have been unable to access their funds since April.
Many people have reacted to Patricia’s announcement with suspicion and scepticism. They think the company might be trying to scam its customers and run away with their money.
This is all the pointer you need to confirm that your money is gone.
Patricia has just upped the level of fintech scam.
Convert users money to worthless testnet tokens – manipulate an initial pump to evoke euphoria, sweep the entire rug and blame it on "the market" https://t.co/mgsneLFaxR
— 👑S.A.L.A.K.O🕊 (@UnkleAyo) August 19, 2023
All people want is for them to get their money back and not have it converted to worthless PnD tokens.
Your customers didn’t ask for tokens.
It’s giving FTX . https://t.co/uIzLLNq52T
— Crypto Coach 🐒📈💰 (@WisdomMatic) August 19, 2023
Causes for concern
It’s not new to see a crypto exchange/company launch a native token. The practice has been around for years. Firms like Binance, Coinbase, and many others use native tokens to raise funds, enhance trading activity and boost liquidity. The company often holds the lion’s share of these tokens. And under normal circumstances, that shouldn’t be a problem. But in Patricia’s case, there are red flags.
Firstly, none of the top crypto aggregators, such as CoinMarketCap and Coingecko, have listed the Patricia token. As a result, there isn’t much information about the asset, such as its actual value, the number of tokens issued, its contract address, and what blockchain it’s running on.
Secondly, the company has not released any whitepaper that explains how this token would be valuable to its holders. And under Nigeria’s SEC guidelines, any company launching a token has to show their roadmaps, both to the regulator and potential holders.
The third point is a bit more technical. Patricia Tokens are supposed to be stablecoins pegged against the dollar. That means speculation should not affect their value. However, achieving this feat is not that simple. The ‘stability’ doesn’t come by default. Instead, the issuing company must have just as many real dollars as digital tokens. So if Patricia is issuing 10 million PTK, it must have $10 million in its reserves. Otherwise, the token’s value will crumble under the weight of heavy transactions. But if the same company has been struggling to rebound from an alleged $ 2 million breach, where will it find the dollars to maintain a peg? And Terra’s collapse shows that there is no alternative to this method.
Lastly, there was no consent. Patricia did not consult its customers before making this decision, hence the outcry. Right now, the only counter-argument is that Patricia has built a name for itself over several years. But history has also proven that longevity does not stop scandals from happening. Case in point: Enron.