Patricia Reacts to $2M Hack by Converting Customer Holdings to ‘Patricia Tokens’
Patricia, a retail trading platform, has made a huge move by turning its clients’ BTC and alternative tokens into Patricia Tokens (PTK), its own proprietary currency.
By Anna B Kiwanuka
Patricia has put a halt to withdrawals for its user base as a result of a breach of security. As a result, the company just announced the successful conversion of all existing Bitcoin and Nigerian naira balances into its own cryptocurrency.
Patricia, a retail trading platform, has made a huge move by turning its clients’ BTC and alternative tokens into Patricia Tokens (PTK), its own proprietary currency. PTK was recently included in the Patricia Plus program as a stablecoin connected to the value of the US dollar, with 1 PTK equaling $1. Nonetheless, the biggest fear among Patricia’s users is the possibility of regaining access to their funds.
In May, Patricia made the decision to suspend withdrawal operations for its platform users after disclosing a security breach. The company disclosed that both Bitcoin and naira holdings were compromised, resulting in an undisclosed financial setback. While Patricia did not provide an exact date for the incident, a TechCabal report indicated that the breach occurred in January 2022, leading to a financial setback of $2 million for the company.
The Emergence of Patricia Plus
Ironically, the introduction of the Patricia Plus app in April triggered a scenario reminiscent of a bank run. Unlike the previous app, which imposed limits on withdrawals, the new application removed such constraints. Consequently, a multitude of customers swiftly attempted to transfer their funds. In a scenario parallel to traditional bank run situations, the retail trading app encountered challenges in promptly meeting the resulting liquidity demands.
Since April, a substantial number of customers have faced difficulties in retrieving their funds. The recent strategy of converting customer holdings into the company’s stablecoin is an attempt to address this predicament. However, this course of action has given rise to numerous uncertainties, raising doubts about its efficacy in facilitating customers’ access to their funds.
Patricia’s breach constituted a failure to uphold the essential duty of safeguarding customer assets, a fundamental responsibility of a centralized exchange. This breach has forced the company to confront obstacles in restoring its customers’ holdings. In response to this predicament, Patricia’s proposed solution involves unilaterally converting customer holdings into stablecoins. Unsurprisingly, this approach has prompted inquiries into its legal standing.
The anticipated consequence involves customers who quickly acquire Patricia tokens endeavoring to rapidly liquidate their assets to regain their funds. This surge in market activity could potentially destabilize the stablecoin’s value, ultimately returning customers to their initial predicament.