The announcement of Patricia Token (PTK) by Nigerian crypto exchange Patricia was greeted by users with scepticism and some suspicion, as they took to social media to question the motives behind the move. Now, in a response to that reaction, the crypto exchange company has released a white paper seeking to explain the intended function of the Patricia Token.
According to the released white paper, the Patricia token is not a stable coin but a debt token, issued to customers to manage users’ debt. Patricia said that it will operate similarly to an IOU (I owe you) document, serving as a means for the exchange to acknowledge its debt to its users, and promising to pay holders 1 USDT for each Patricia Token in the future.
In April 2023, Nigerian crypto exchange Patricia halted withdrawals and deposits due to a breach. However, customers who have not been able to access their funds for months due to the breach were not mollified by the announcements. They raised questions, including how the token was backed and why Patricia converted them without customer consent. A major question is when they will be able to access their funds. The PTK whitepaper does not offer a specific answer to this question.
Understanding Patricia Token – Our Commitment to You
We remain committed to our promise of transparency, our dedication to resolve all pending issues and also innovate better solutions for you. pic.twitter.com/Cq8Rk3mReC
— Patricia (@PatriciaSwitch) August 24, 2023
According to the paper, users whose BTC and naira balances were changed into PTK have the option to redeem it for USDT, which can subsequently be exchanged for other cryptocurrencies or fiat like naira. All conversions will be determined by the asset’s US dollar value as of April 29, 2023. However, the new Patricia Plus App launch will provide customers who suffered losses in BTC and naira due to the breach access to PTK tokens that will serve as their debt tokens.
In 2016, Bitfinex introduced BFX after a hack resulted in the loss of 119,756 bitcoins (equivalent to $72 million back then). Similarly to Patricia’s approach, Bitfinex issued a debt token named BFX to compensate customers affected by the hack, and eventually repurchased these tokens from customers.