Nigeria's Patricia crypto exchange clarifies its token amid confusion

Users skeptical of Patricia Token

The recent announcement of Patricia Token (PTK) by Nigerian crypto exchange Patricia has raised suspicions among users. Taking to social media, many questioned the motives behind the move and expressed their doubts. In response, the crypto exchange company has released a white paper to explain the purpose of the Patricia Token.

Patricia Token is not a stable coin

The released white paper clarifies that the Patricia Token is not a stable coin, but rather a debt token issued to customers for managing their debts. Similar to an IOU document, the token serves as a way for the exchange to acknowledge its debt to users. Patricia promises to pay holders 1 USDT for each Patricia Token in the future.

Customer concerns over breach

In April 2023, Patricia halted withdrawals and deposits following a breach. Customers affected by the breach, who have been unable to access their funds for months, were not satisfied with the company's announcements. They raised questions about the backing of the token and why conversions were made without their consent. The main concern remains when they will regain access to their funds. The PTK white paper does not provide a specific answer to this question.

Redemption option for affected users

According to the white paper, users whose BTC and naira balances were changed into PTK will have the option to redeem the token for USDT. The redeemed USDT can then be exchanged for other cryptocurrencies or fiat currencies like the naira. The conversion rates will be based on the US dollar value of the assets as of April 29, 2023. Additionally, the launch of the new Patricia Plus App will provide customers who suffered losses in BTC and naira due to the breach with access to PTK tokens, which will serve as their debt tokens.

In a similar fashion, in 2016, Bitfinex introduced BFX tokens after a hack resulted in the loss of 119,756 bitcoins (equivalent to $72 million at the time). These tokens were issued as debt tokens, compensating customers affected by the hack. Eventually, Bitfinex repurchased these tokens from the customers.