After freezing withdrawals for users of its platform in response to a breach, Patricia has announced that it converted all current outstanding BTC and naira balances to its token.
The retail trading app Patricia has converted the BTC and other tokens their customers own to its Patricia Token (PTK) token. A Friday post announcing its new app, Patricia Plus, described PTK as a stablecoin backed by the U.S. dollar, with 1PTK equal to $1. Yet the big question Patricia’s customers have is if they will finally have access to their funds.
In May, Patricia froze withdrawals for users of its platform after sharing that it was the victim of a breach. The company said Bitcoin and naira assets had been compromised and told customers that it had lost an undisclosed sum. Patricia did not share the date of the incident, but TechCabal exclusively reported that the breach happened in January 2022 and cost the company $2 million.
The return of Patricia Plus
Ironically, the Patricia Plus app launch in April triggered what closely resembled a bank run. While customers had withdrawal restrictions on the old app, the new app had no such restrictions, and many customers quickly tried to move their funds. Like most bank runs, the retail trading app did not have immediate liquidity to meet those needs.
Many customers have been unable to access their funds since April, and the decision to convert customer assets to the company’s stablecoin is an attempt to solve the problem. Yet the move raises many questions, and it is doubtful that this will let customers access their funds. A crypto expert who asked to be identified by his X handle @samlogic_, told TechCabal, “Their monies will be a worthless token printed out of mid-air. I think the funds are long gone; Patricia has misappropriated customer assets just like FTX.”
By failing to keep its customer’s assets safe–the primary duty of a centralised exchange–Patricia fell victim to a breach that has now put it in a place where it will struggle to return its customer’s assets. Its workaround to that problem is to unilaterally convert its customer assets to stablecoins, rightly raising questions of legality.
The most likely scenario is that customers who immediately have access to Patricia tokens will quickly attempt to sell the assets to get their monies back. That market frenzy may cause the stablecoin to depeg and return customers right where they started. TechCabal attempted to get comments from Patricia, but there was no response at the time of this report.
*Editor’s note: an earlier version of this story published the name of a source who has now asked to be identified only with a Twitter handle.
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