- DLM Trust Company has officially terminated its appointment as escrow trustee for Patricia Technologies to coordinate the management and disbursement of customers' funds in naira.
- DLM Trust Company said Patricia breached agreement terms when the announcement of its appointment was construed as a partnership.
- It said the mention of a partnership affected the financial firm negatively, which is why it terminated its appointment.
A source within DLM Trust Company said the phrasing of its agreement with Patricia as a partnership caused its existing client to assume it was going to pay Patricia customers out of its pocket.
The source said DLM Trust Company is a subsidiary of DLM Capital Group, a conglomerate that has been around for 20 years and when its escrow trustee appointment by Patricia was misconstrued as a partnership, its clients and investors became worried.
"They thought DLM Trust was going to pay Patricia's customers out of its own pocket.
The firm tried to clear the air around that but the news already affected other subsidiaries. The heat was too much for the group and it did not want to lose billions of naira over the appointment."
The source also revealed that DLM Trust was not keen on making any announcements about the appointment.
Interestingly, the firm reposted the announcement on its social media pages before it reneged on the agreement the next day.
Patricia said in a statement that it is "shocked by DLM Trust Company's sudden and unilateral decision to terminate our partnership."
It also said it had made the transfer for the planned payout to DLM Trust Company before the appointment was terminated.
The source that spoke to Techpoint Africa confirmed the transfer of funds to DLM Trust and said the funds have been sent back to the crypto exchange.
"This proves that Patricia has the money to pay back and it is doing its best to pay back the customers and I wouldn't really put the blame on them."
Why did Patricia need DLM Trust Company to pay back customers?
Patricia appointed DLM Trust Company as an escrow trustee because "they wanted to show transparency in their process of disbursement of funds to their customers." the source said.
An escrow is a financial service used when two parties have obligations to fulfill before payment is made and received. For example, someone who delivers goods to buyers needs to be assured that they'll receive their payment once they have delivered the goods.
The buyer also needs to receive the package in good condition before they send payment. A third party — the escrow — holds the buyer's money and would only send it to the seller when the goods have been delivered.
In Patricia's case, there isn't a buyer or a seller, per se. Customers have money in the crypto company and want to be paid back.
This makes the need for an escrow a bit difficult to figure out. It, however, points out that Patricia and its customers have obligations to fulfill before payment is made to customers.
While these obligations aren't known, the company disclosed in its Patricia token whitepaper that it will release funds with a smart contract.
The contract will release funds based on the company's profitability.
Meanwhile, the disbursement of funds to customers is still slated to start on November 20, 2023.
Customers who attended the company's town hall meeting last Friday said the first batch of payments would be made to customers with low balances. The date for the next batch, however, is unknown.