Patricia has once more been in the forefront of the Nigerian cryptocurrency market over the past week. Even while the troubled corporation has frequently attracted media attention lately, its most recent action has drawn strong criticism from industry participants, supporters, and even outsiders.
Patricia mentioned a particular Patricia Token last Friday when it was introducing its most recent redesign as a "Patricia Plus app." This Patricia Token ($PTK) will be a stablecoin backed by the US dollar, per the release on X (previously Twitter).
The cryptocurrency startup wants to record all outstanding Bitcoin and Naira from customers in its Patricia Token, according to the release. More specifically, customers' unpaid BTC and Naira balances on the old app will be changed to this new Patricia Token ($PTK), with the conversion rate determined by the value of the assets on April 29, 2023.
What is Patricia Token? 🤔 pic.twitter.com/q5ThUu2u7Q
— Patricia (@PatriciaSwitch) August 18, 2023
The action sparked a lot of comments, responses, and anger, notably on Twitter, because specific information regarding the odd "stablecoin" was not made available. The social media app's members were vocal in their claims that the scheme was merely a cover for an escape fraud.
Hanu Fejiro, the CEO of the troubled cryptocurrency exchange, has nevertheless issued a statement to set the record straight. The Patricia Token's technical details were clarified in a video.
Patricia Token is not a stablecoin, it’s a debt token
The announcement of the $PTK, according to a statement made by Hanu to a closed group to which a technext correspondent belongs, was greatly misinterpreted. According to him, Patricia Token was given to clients to help them manage their debt rather than being a stable coin.
“All customers’ funds would be accounted for 1:1, pegged to a stable coin, USDT. We would be redeeming these debt tokens from our customers monthly.”
In plainer terms, the token is an internal token that acts as a debt management token for the assets affected by Patricia's security breach. Its value is tied to the USDT and would be supported by the USDT; it does not change, rise, or fall in value.
Only consumers who have successfully completed the asset validation procedure will have access to the token, which is tied to the stablecoin USDT. The sole currency that can be exchanged for the tokens is USDT, which users can do on-chain.
The statement additionally stated:
“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.”
Customers who have completed the Asset Recovery Form will be given priority for withdrawals once the app relaunches, according to the statement, and users will be able to see the total amount available for withdrawal in their accounts.
You cannot purchase $PTK. In essence, it is a debt instrument that holds the deficit that Patricia owes its clients. It cannot be purchased with other assets and is only issued to customers with affected balances.
Which crypto company has deployed debt token in the past?
When Bitfiniex suffered a hack loss of $72 million in 2016, they were the first to offer debt tokens. Customers received "Recovery Rights Tokens" from the cryptocurrency exchange, which they could swap for BFX tokens. The cryptocurrency exchange was able to settle all of its debt in just 11 months.
Despite the fact that crucial details like these may have been disclosed earlier, Patricia's most recent action can be viewed as a positive step in the right direction.
We are currently waiting for the app to reload so that users can view their available balance in Tokens and convert it to USDT for withdrawal.
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