Grace Ashiru
In light of a security breach, Patricia has suspended withdrawals for its platform users. As a response, the company has recently revealed that it has successfully transformed all existing BTC and naira balances into its proprietary token
The retail trading platform Patricia has made a significant move by converting its customers’ BTC and other tokens into its proprietary Patricia Token (PTK). The recent announcement of the new app, Patricia Plus, highlighted that PTK is a stablecoin pegged to the U.S. dollar, with 1PTK equivalent to $1. However, the central concern among Patricia’s customers remains whether they will finally regain access to their funds.
Patricia decided to suspend withdrawals for its platform users in May after disclosing a security breach. The company revealed that Bitcoin and naira assets had been compromised, resulting in an undisclosed financial loss. Although Patricia didn’t specify the exact incident date, exclusive reporting by TechCabal indicated that the breach occurred in January 2022, leading to a $2 million loss for the company.
The return of Patricia Plus
In a twist of irony, the introduction of the Patricia Plus app in April sparked a situation reminiscent of a bank run. While the previous app had imposed withdrawal limits on customers, the new app removed such constraints. As a result, numerous customers swiftly attempted to transfer their funds. Parallel to typical bank run scenarios, the retail trading app faced challenges promptly meeting these liquidity demands.
Since April, a considerable number of customers have encountered difficulties in retrieving their funds. The recent strategy of transforming customer assets into the company’s stablecoin is intended to address this issue. However, this course of action has given rise to numerous uncertainties, casting doubt on whether it will effectively enable customers to access their funds. An individual well-versed in cryptocurrency matters, identified by the pseudonym “@samlogic_,” expressed to TechCabal, “The value of their holdings will essentially be reduced to a meaningless token generated out of thin air. I suspect the funds have already vanished; Patricia has mishandled customer assets, similar to the situation with FTX.”
Patricia succumbed to a breach by failing to uphold the fundamental responsibility of safeguarding customer assets, which is a core duty of a centralized exchange. This breach has led the company to face challenges restoring its customers’ assets. To navigate this predicament, Patricia’s solution involves unilaterally transforming customer assets into stablecoins. This approach has rightfully sparked inquiries into its legality.
The probable outcome entails customers who promptly obtain Patricia tokens attempting to rapidly liquidate the assets to their funds. This surge in market activity could potentially lead to the stablecoin losing its peg and customers returning in the same initial situation. Despite TechCabal’s efforts to seek comments from Patricia, there was no response at the time of this report.
