Africa is present process a big 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 affords a extra environment friendly and cost-effective answer in comparison with conventional strategies and the emergence of crypto buying and selling choices comparable to peer-to-peer (P2P), spot, arbitrage, and futures buying and selling which has offered a brand new supply of earnings for thousands and thousands 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 spread of challenges on a world scale. These challenges encompassed regulatory and compliance points and a number of other situations of protocol hacks and scams, amongst others.
The crypto winter, which began in late 2021 after the value of Bitcoin peaked at round $68,000 in November 2021, principally worsened issues because it prompted heavy monetary losses for buyers (each retail and institutional), consequently triggering a wave of industry-wide firm fails, bankruptcies, layoffs, elevated felony actions and a bunch of different adversarial 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 widely known African cryptocurrency change.
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 in addition launched Africa’s first crypto debit card, selling adoption.
In 2021, Patricia expanded its companies by including Ethereum (ETH) to its supported cryptocurrencies, additional solidifying its place within the regional cryptocurrency panorama. Patricia’s fast progress transcended borders, providing companies 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 collection of setbacks, culminating in an unprecedented disaster. The change 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, nonetheless, 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 consumer consent, this conversion sparked anger and disbelief amongst customers and the broader fintech and cryptocurrency group.
As Patricia grapples with the aftermath of those controversial actions, its future hangs within the steadiness. 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 influence on the platform’s operations in Africa, notably Nigeria, its largest market.
What’s Patricia?
Patricia, based in 2017 by Fejiro Hanu Agbodje, is an built-in different 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 carry Africa into the digital foreign money age with blockchain know-how, 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 know-how, 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 selected type of digital foreign money that features solely inside a sure blockchain platform. They serve numerous functions, comparable to transactions, accessing platform options, and taking part in governance selections. Not like general-purpose cryptocurrencies, native tokens are carefully 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 good contracts. This token sort will be simply transferred alongside different varieties 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 keeping 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 change largely holds a considerable amount of the tokens and every time the worth of the token rises the corporate makes extra money.”
Main Crimson Flags with Patricia’s Token Launch
Patricia launching a local token in an try to get better losses or create a substitute worth for its customers will not be essentially a foul concept, particularly contemplating its potential advantages for the corporate.
When Bitstamp, one of many world’s oldest cryptocurrency exchanges, needed to increase its enterprise operations, the corporate opted for fundraising techniques to increase its companies to retail and institutional crypto shoppers. Present prospects have been saved 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 prospects. 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 prospects 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 number of the suspicions and questions raised by prospects that spotlight potential points with the creation of PTK.
Unilateral Conversion of Person Balances With out Consent
On August 18th, Patricia made an announcement by means of its official account on X (previously often called 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 prospects took to social media to specific their dissatisfaction with the platform’s actions, as the continued 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 offered BTC to your organization? Who informed you I would like your coin? That is daylight theft!!!
— Highzy (@highzy) August 24, 2023
Patricia’s unilateral conversion of shoppers’ Bitcoin and Naira balances right into a native token with out their consent was deemed a gross violation of belief. Unsurprisingly, prospects began questioning whether or not they nonetheless retained possession of their funds or if the change had ulterior motives for this motion.
A significant difficulty that has emerged now’s that if prospects have 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 workforce concerning these points have confirmed unsuccessful. Some prospects are considering authorized motion in opposition to the platform, whereas others are speculating concerning the potential outcomes of Patricia’s actions.
PTK Not Out there On Any Crypto Aggregator or Blockchain
One other pink flag that prospects have famous for the reason that launch of the Patricia Token (PTK) is its absence from main crypto aggregators, comparable 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 handle for the just lately launched PayPal stablecoin (PYUSD) on the Ethereum blockchain is already accessible on these crypto aggregators.
The delay in offering this data by Patricia is inflicting frustration amongst prospects, which doesn’t bode nicely for the corporate. Belief is a cornerstone of the cryptocurrency {industry}, and Patricia’s actions would possibly drive prospects away, tarnishing the change’s repute. This, in flip, undermines its future viability and deters potential buyers desirous about African crypto initiatives.
Closing Ideas
Failing to maintain prospects’ property secure is already adequate grounds for charging Patricia with breach of belief. This places them in a precarious scenario the place they’d both want to revive prospects’ 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 change’s actions adjust to related legal guidelines and rules pertaining to buyer safety, transparency, and honest enterprise practices. Based mostly on priority, as soon as regulatory our bodies turn out to be concerned, it might turn out to be tougher for the crypto {industry} to thrive in Africa.
It stays unclear how Patricia intends to reassure its involved prospects 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 perform turns into energetic, it’s extremely doubtless that prospects who achieve quick entry to Patricia tokens will swiftly promote their property to reclaim their funds and terminate their affiliation or buying and selling with Patricia. This might inevitably end result within the supposed native token shedding its peg, and prospects 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 must be construed as monetary, authorized, or tax recommendation. Buying and selling or investing in cryptocurrencies carries a substantial threat of monetary loss. All the time conduct due diligence.
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