Nigerian crypto exchange, Patricia has announced the launch of a native token called Patricia token (PTK). The native token which it claims is a stablecoin pegged to the dollar ($1 = 1PTK), will replace customers' outstanding balances in bitcoin (BTC and naira).
In the company's announcement post on X (formerly Twitter), it said the operations of the exchange will be moved to a new platform called Patricia Plus app.
This is coming after the company announced that it was a victim of a breach that led to the loss of funds. While it said no customer funds were affected, users of the platform have been unable to access their funds since April.
Patricia's announcement has been met with takes that suggest the company might be planning an exit scam, leaving customers whose money has been trapped on the platform stranded.
Is Patricia's token launch an exit scam? This article will look at the circumstances surrounding the lunch.
What are native tokens?
Native tokens are digital assets that are native to a cryptocurrency exchange. Examples are Binance's BNB, Quidax's QDX, Bundle's BDX and FTX's FTT.
Why is Patricia launching a native token?
Crypto exchanges launch native tokens for many reasons, some include;
- To increase liquidity.
- To incentivise trading activity.
- Facilitate community ownership of the exchange.
- Fund-raising tactic
Given Patricia's troubles with money recently, it can be inferred that the native token was launched as a fund-raising tactic.
According to the Founder of Hyperspace Technologies, Oluseyi Akindeinde, launching native tokens is a way of raising funds for many exchanges. When these tokens are launched, the exchange holds a significant part of the tokens, meaning if the value of the token increases the company makes more money.
The red flags in the token launch
As pointed out in tweets, there are a couple of red flags in Patricia's launch of PTK.
The token is not available on any cryptocurrency aggregator
The token is not available on any of the top crypto aggregators such as CoinMarketCap and Coingecko. These aggregators provide more information on the token such as its actual value, the number of tokens issued, the token's contract address, and the blockchain it was launched.
Akindeinde, however, said it could take some time for newly launched tokens to be listed on aggregators.
It is not available on any blockchain
PTK is not available on popular blockchains where exchanges launch their native tokens. For example, you can find PayPal's recently launched stablecoin, PYUSD on Ethereum blockchain upon which it was launched.
A source close to the matter said the token has not been launched yet and it will only serve as an instrument to hold debt within Patricia's books.
Converting user balance without consent
In its announcement on X, Patricia said outstanding balances will be converted to PTK. This was done without customer consent and many fear that they might not be able to exchange the token for fiat currency or other cryptocurrencies like bitcoin.
If customers can withdraw funds, a withdrawal surge will cause PTK to de-peg leaving customers who were unable to make withdrawals stranded.
Techpoint Africa has reached out to Patricia for comments concerning the issues raised, but the exchange is yet to respond.