Over the last week, the spotlight of the Nigerian crypto industry once again fell on Patricia. Although the embattled company has enjoyed media attention more than a few times recently, its latest move has generated widespread reaction from industry stakeholders, enthusiasts and even outsiders.
Last Friday, when Patricia was announcing its latest rebranding into a ‘Patricia Plus app’, it made mention of a particular Patricia Token. According to the announcement on X (formerly Twitter), this Patricia Token ($PTK) will be a stablecoin backed by the United States dollar.
According to the announcement, the crypto company intends to record all users’ outstanding Bitcoin and Naira in its Patricia Token. In more explicit terms, users’ outstanding BTC and Naira balances on the former app will be converted to this new Patricia Token ($PTK) and the conversion rate will be calculated at the rate of the assets on April 29 2023.
Because explicit information about the bizarre ‘stablecoin’ was not made available, the move generated a lot of remarks, reactions and backlash, especially on Twitter. Many users of the social media app claimed that the scheme was just a disguise for an exit scam.
The CEO of the embattled crypto exchange, Hanu Fejiro, has however released a statement to clear the air. In a video, the technicalities behind the Patricia Token were simplified.
Patricia Token is not a stablecoin, it’s a debt token
According to a statement issued by Hanu to an exclusive community that our correspondent belongs to, the announcement of the $PTK was largely misunderstood. In his words, Patricia Token is not a stable coin but a debt token, issued to customers to manage users’ debt.
In clearer terms, the token is an internal token that serves as a debt management token for affected assets lost during the security breach that Patricia suffered. Its value does not fluctuate, rise, or fall; its value is pegged against the USDT and would be backed by the USDT.
The token is pegged to a stablecoin, the USDT and it will only be available to customers who have completed the asset validation process. The tokens can only be converted to USDT which users can convert to USDT on-chain.
Additionally, the statement says:
“All affected assets from the previously announced security breach are those that were pegged to the Patricia token (BTC, USD, and Naira). These assets will be converted to Patricia Tokens at their respective trading rates as of the 29th of April 2023. Every other asset, e.g., ETH, XRP, DOGE, etc., is unaffected.”
The statement further says users would be able to see the total amount available for withdrawal in their balances and customers who have filled out the Asset Recovery Form would be prioritised for withdrawals once the app relaunches.
$PTK cannot be bought. It is basically a debt instrument used to hold the deficit Patricia owes its customers. It is only issued to customers with affected balances and it cannot be bought with other assets.
Which crypto company has deployed debt token in the past?
Debt tokens were first introduced by Bitfiniex when they lost $72m to a hack in 2016. The crypto exchange issued “Recovery Rights Tokens” to customers which were traded as BFX tokens. Within 11 months, the crypto exchange was able to pay off all its debt.
In conclusion, the latest move from Patricia could be seen as a good move in the right direction, although important pieces of information like this could have been made available in the initial stages.
For now, we await when the app will relaunch and customers will be able to see their available balance in Tokens and subsequently convert to USDT for withdrawal.
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