Africa is present process a major cryptocurrency revolution, primarily pushed by its youth inhabitants. This surge is a response to elements like unstable fiat currencies – finest exemplified by Nigeria’s struggling naira, the rising use of crypto for cross-border transactions, which gives a extra environment friendly and cost-effective resolution in comparison with conventional strategies and the emergence of crypto buying and selling choices equivalent to peer-to-peer (P2P), spot, arbitrage, and futures buying and selling which has offered a brand new supply of revenue for tens of millions of unemployed youths.
Notably, the Worldwide Financial Fund (IMF) recorded a outstanding month-to-month peak of $20 billion in crypto transactions by mid-2021, highlighting the magnitude of crypto adoption within the continent.
Nevertheless, because the crypto {industry} expanded, it encountered a variety of challenges on a world scale. These challenges encompassed regulatory and compliance points and several other cases of protocol hacks and scams, amongst others.
The crypto winter, which began in late 2021 after the worth of Bitcoin peaked at round $68,000 in November 2021, mainly worsened issues because it triggered heavy monetary losses for buyers (each retail and institutional), consequently triggering a wave of industry-wide firm fails, bankruptcies, layoffs, elevated legal actions and a number of different hostile occasions.
The reliability of centralized exchanges additionally got here into query, giving rise to the broadly accepted notion: “Not your keys, not your cash.” These challenges set the stage for the predicaments confronted by Patricia, a well known African cryptocurrency alternate.
Patricia swiftly gained prominence after its launch, redefining African cryptocurrency interactions. The platform not solely facilitated straightforward shopping for, promoting, and safe storage of Bitcoin but additionally launched Africa’s first crypto debit card, selling adoption.
In 2021, Patricia expanded its providers by including Ethereum (ETH) to its supported cryptocurrencies, additional solidifying its place within the regional cryptocurrency panorama. Patricia’s speedy development transcended borders, providing providers throughout a number of international locations, and all indications pointed to a promising future.
Nevertheless, the narrative took a darkish flip as Patricia encountered a sequence of setbacks, culminating in an unprecedented disaster. The alternate abruptly froze buyer withdrawals in Could 2023, ascribing the suspension to a cyber breach reported in January 2022, which resulted in a reported lack of roughly $2 million.
These challenges have, nevertheless, now been eclipsed by a recent, extremely controversial transfer: the conversion of customers’ Bitcoin (BTC) and naira (NGN) balances into Patricia’s native token, PTK. Executed with out person consent, this conversion sparked anger and disbelief amongst customers and the broader fintech and cryptocurrency neighborhood.
As Patricia grapples with the aftermath of those controversial actions, its future hangs within the stability. Can it regain the belief of present customers and potential newcomers?
This text comprehensively explores the multifaceted Patricia controversy, dissecting the occasions resulting in the unauthorized asset conversion. It additionally examines the controversy’s impression on the platform’s operations in Africa, significantly Nigeria, its largest market.
What’s Patricia?
Patricia, based in 2017 by Fejiro Hanu Agbodje, is an built-in various funds and e-commerce platform the place buyers and retailers can transact with digital currencies like Bitcoin, reward playing cards, and excellent cash.
The platform was constructed to convey Africa into the digital foreign money age with blockchain expertise, innovation, and fee options. Patricia additionally launched an academy the place Africans can entry a wealth of academic content material on shopping for crypto property and assist customers make clear any doubts they’ve concerning the cryptocurrency market.
Patricia additionally launched a digital card powered by chip and pin expertise, which can be utilized to withdraw funds from Bitcoin ATMs and conduct cryptocurrency transactions.
As said earlier, Patricia began having liquidity points, which have now been attributed to a $2 million hack. As a substitute of instantly notifying customers concerning the scenario, the corporate transformed customers’ crypto and naira property right into a native token known as the Patricia Token (PTK).
Native tokens are a particular type of digital foreign money that features completely inside a sure blockchain platform. They serve numerous functions, equivalent to transactions, accessing platform options, and collaborating in governance choices. In contrast to general-purpose cryptocurrencies, native tokens are intently tied to the functionalities of a specific blockchain.
One vital benefit of getting a local token is that it simplifies asset transfers with out counting on sensible contracts. This token sort will be simply transferred alongside different kinds of crypto tokens. Moreover, for the reason that token’s logic is managed inside the blockchain’s ledger, the presence of a local token minimizes the danger of human error.
In accordance with a report from Techpoint, Oluseyi Akindeinde – CTO – of Digital Encode Restricted, said,
“Launching a local token is a method of elevating funds for a lot of exchanges. Anytime these tokens get launched, the alternate largely holds a considerable amount of the tokens and every time the worth of the token rises the corporate makes more cash.”
Main Pink Flags with Patricia’s Token Launch
Patricia launching a local token in an try to recuperate losses or create a substitute worth for its customers will not be essentially a nasty thought, particularly contemplating its potential advantages for the corporate.
When Bitstamp, one of many world’s oldest cryptocurrency exchanges, wished to develop its enterprise operations, the corporate opted for fundraising techniques to increase its providers to retail and institutional crypto shoppers. Current clients had been stored knowledgeable all through your entire course of.
Nevertheless, within the case of Patricia, the corporate determined to launch its native token with out notifying its clients. Customers weren’t concerned through the decision-making section, and this determination got here not very lengthy after a safety breach that resulted in heavy monetary losses. Consequently, this transfer is now elevating suspicions, with clients questioning the safety of the native token and whether or not the corporate has a real motive behind its creation.
Let’s delve into a few of the suspicions and questions raised by clients that spotlight potential points with the creation of PTK.
Unilateral Conversion of Consumer Balances With out Consent
On August 18th, Patricia made an announcement by way of its official account on X (previously referred to as Twitter) concerning the upcoming launch of a brand new app known as “Patricia Plus.” The announcement additionally said that every one current BTC and NAIRA balances can be transformed and recorded as Patricia Tokens (PTK) – a stablecoin backed by the U.S. Greenback.
Following the announcement, disgruntled clients took to social media to specific their dissatisfaction with the platform’s actions, as the continuing difficulty of suspended asset withdrawals since April remained unresolved.
This Patricia app has ruined me!!! Over two million naira! And this app is toying with my asset! @EFCC please look into this matter, Why will you change my Naira to a coin after I bought BTC to your organization? Who advised you I would like your coin? That is daylight theft!!!
— Highzy (@highzy) August 24, 2023
Patricia’s unilateral conversion of consumers’ Bitcoin and Naira balances right into a native token with out their consent was deemed a gross violation of belief. Unsurprisingly, clients began questioning whether or not they nonetheless retained possession of their funds or if the alternate had ulterior motives for this motion.
A serious difficulty that has emerged now’s that if clients had been allowed to withdraw their funds, PTK might turn out to be depegged, and those that are sluggish to course of withdrawals would incur substantial losses.
Makes an attempt to contact Patricia’s crew concerning these points have confirmed unsuccessful. Some clients are considering authorized motion towards the platform, whereas others are speculating concerning the potential outcomes of Patricia’s actions.
PTK Not Obtainable On Any Crypto Aggregator or Blockchain
One other purple flag that clients have famous for the reason that launch of the Patricia Token (PTK) is its absence from main crypto aggregators, equivalent to CoinMarketCap and Coingecko.
These platforms are famend for offering details about numerous tokens, together with real-time values, token issuance portions, contract addresses, and launch blockchains.
In distinction, information concerning the precise worth, token issuance portions, and the token’s contract tackle for the just lately launched PayPal stablecoin (PYUSD) on the Ethereum blockchain is already out there on these crypto aggregators.
The delay in offering this data by Patricia is inflicting frustration amongst clients, which doesn’t bode effectively for the corporate. Belief is a cornerstone of the cryptocurrency {industry}, and Patricia’s actions would possibly drive clients away, tarnishing the alternate’s popularity. This, in flip, undermines its future viability and deters potential buyers fascinated about African crypto tasks.
Ultimate Ideas
Failing to maintain clients’ property secure is already enough grounds for charging Patricia with breach of belief. This places them in a precarious scenario the place they might both want to revive clients’ property to their preliminary Bitcoin and Naira balances, refund customers in Naira or threat shutting down operations.
Patricia’s determination to transform customers’ funds right into a native token is already elevating authorized questions and will appeal to regulatory scrutiny. Regulatory our bodies would possibly examine whether or not the alternate’s actions adjust to related legal guidelines and rules pertaining to buyer safety, transparency, and truthful enterprise practices. Primarily based on priority, as soon as regulatory our bodies turn out to be concerned, it might turn out to be harder for the crypto {industry} to thrive in Africa.
It stays unclear how Patricia intends to reassure its involved clients with the January 2022 hack, the present suspension on withdrawals, and the next conversion of buyer funds into Patricia Token (PTK). The corporate’s failure to handle inquiries from customers or the media has additional casted a shadow of uncertainty on the agency’s future.
Given the present circumstances, as soon as Patricia’s withdrawal operate turns into lively, it’s extremely seemingly that clients who acquire instant entry to Patricia tokens will swiftly promote their property to reclaim their funds and terminate their affiliation or buying and selling with Patricia. This could inevitably outcome within the supposed native token shedding its peg, and clients unable to withdraw throughout this frenzy might finally lose their funds.
Disclaimer: This text is meant solely for informational functions and shouldn’t be thought-about buying and selling or funding recommendation. Nothing herein ought to be construed as monetary, authorized, or tax recommendation. Buying and selling or investing in cryptocurrencies carries a substantial threat of economic loss. All the time conduct due diligence.
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