This Nigerian Crypto Exchange Valued At $50 Million Is Raising Suspicions, Here’s Why

Nigerian crypto exchange Patricia has raised suspicions following its newly launched Patricia Stablecoin labeled PTK and its unilateral decision to convert users’ funds to its stablecoin without its users’ consent.

Patricia’s Dubious Move

In May 2023, the Nigerian exchange Patricia reportedly fell victim to a hack and reportedly lost close to $2 million. During this period, clients and users faced a lot of difficulties gaining access to their funds as Patricia froze all withdrawals in its platform and provided a statement to assure its worried users about the situation of their funds.

However, Patricia users were still able to withdraw their funds via the crypto exchange’s newly launched app known as Patricia Plus App, but only a few withdrawals were processed as the platform could not process all withdrawal requests.

A few months after the hack, Patricia announced the introduction of its native token Patricia Token (PTK) on August 18, a stablecoin pegged to the US dollar, as a means to rectify its inability to meet user withdrawals. Although connected to the exchange’s trouble relating to money, it also seems like the token was launched for fundraising purposes.

However, following the introduction of its stablecoin, Patricia has unilaterally converted its users’ funds to its newly launched stablecoin without seeking consent from its users, sparking speculation about the token’s launch and a potential exit scam.

The exchange took to X (formerly Twitter) on August 18, 2023, informing its users that all current outstanding BTC and Naira balances will be recorded in Patricia Token.

These actions have raised lots of criticism among the crypto community as some community members already flagged these actions as a potential exit scam by the exchange.

“This is all the pointer you need to confirm that your money is gone. Patricia has just upped the level of fintech scam. Convert users money to worthless testnet tokens – manipulate an initial pump to evoke euphoria, sweep the entire rug and blame it on ‘the market’,” an X (formerly Twitter) user on stated August 19, in response to the announcement made by the exchange. 

Another user took to X (formerly Twitter) in response to the announcement calling the move an ‘Exit scam Pro max’ and emphasizing that users are not going to get back their funds.

So far, local crypto community members have indicated other several potential factors of fraud toward the introduction of the Patricia token (PTK). Some of these were the token being absent from cryptocurrency platforms that provide complex information about a token such as CoinMarketCap and CoinGecko, and PTK not existing on widely used blockchains that are normally used to launch native tokens.

Other crypto enthusiasts have blasted the exchange for not being able to provide a proof-of-reserve for its native token. “This seems like a scam before you can say your token is backed by the US dollar. There should be a proof of reserve,” an X (formerly Twitter) user stated.

When Did The Hack Happen?

Patricia’s alleged hack that resulted in the exchange losing close to $2 million in May 2023, was reported to have actually happened in January 2022.

The exchange had closed all withdrawals in late May 2023, claiming the exchange experienced a hack that affected the retail trading application and that both Bitcoin BTC and Naira assets were compromised in an email.

Following the announcement, data from anonymous sources indicated that the hack occurred in January 2022. Patricia suspended withdrawals and transfer of crypto assets to other wallets on its platform but continued to allow deposits.

During this period, Patricia came up with an offer to purchase its users’ crypto assets and to compensate them with cash in order to handle the situation. However, this offer was temporary and eventually came to an end in March 2023.

Total market cap falls to $1.069 trillion | Source: Crypto Total Market Cap on Tradingview.com

Featured image from NewsBTC, chart from Tradingview.com