Patricia Converts Assets into Tokens without Customer’s Consultation
Patricia, a retail trading software company, has changed their customers’ BTC and other tokens to the Patricia Token (PTK).
Patricia has declared that it has changed all existing outstanding BTC and naira balances to its token after halting withdrawals for platform users in reaction to a breach.
A Friday post announced its new app, Patricia Plus, describing PTK as a stablecoin backed by the U.S. dollar, with 1 PTK equal to $1. The key question for Patricia’s customers is when they will be able to retrieve their money.
Patricia suspended withdrawals for its platform customers in May after revealing that it had been the victim of a breach. The company stated that its Bitcoin and naira assets had been compromised and that they had lost an undisclosed value.
Patricia did not disclose the incident’s date, but TechCabal exclusively reported that it occurred in January 2022 and cost the company $2 million.
Ironically, the launch of the Patricia Plus app in April resembled a bank run. While the old app had withdrawal restrictions, the new app did not, and many consumers soon attempted to transfer their monies. The retail trading app, like other bank runs, lacked immediate liquidity to meet those needs.
Since April, many users have been unable to access their funds, and the move to convert consumer assets to the company’s stablecoin is an attempt to address the issue. However, the decision creates many uncertainties, and it is unlikely that clients will be able to retrieve their money as a result.
Patricia committed a violation by failing to keep its customers’ assets safe–the primary obligation of a centralised exchange–and is now in a position where it will struggle to refund its customers’ assets. Its solution to this dilemma is to unilaterally convert its customer assets to stablecoins, which raises legitimate legal concerns.
Customers who have immediate access to Patricia tokens are more inclined to try to sell the assets in order to recoup their funds. Because of the market excitement, the stablecoin may depeg and send customers back to where they started. Patricia was contacted by TechCabal, but no response was received at the time of this report.
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