Nigerian crypto exchange’s token launch draws scrutiny

Patricia, a Nigerian cryptocurrency exchange, has revealed the introduction of its own native token named Patricia token (PTK). However, this launch has generated more doubt than applause within the local cryptocurrency community.

Native tokens are digital assets that are specific to a particular blockchain platform or cryptocurrency exchange. They are created and issued directly by the platform or exchange itself. Examples of native tokens include Binance Coin (BNB) on the Binance exchange, Ether (ETH) on the Ethereum network, and SOL on the Solana blockchain.

In the official communication on X (formerly Twitter), the company stated its intention to transition exchange operations to the Patricia Plus app. The newly introduced native token, which the company asserts is a stablecoin with a 1:1 peg to the dollar (1PTK = $1), is expected to take the place of customers’ existing bitcoin (BTC) and naira balances.

The major issue here is

If u can afford to give people(converting their balance) a stable coin backed by Usd

Then Why not just give them their tokens back ? https://t.co/GKgBQdi4Yg

— Solomon_Gift (@Crypto__hub) August 19, 2023

This development follows the company’s previous disclosure of a security breach resulting in fund losses in May 2023. Despite asserting that customer funds remained unaffected, platform users have faced ongoing difficulties in accessing their funds since April.

The response to Patricia’s announcement has led to speculation around fears of a potential exit scam, which could leave customers who have funds stuck on the platform in a precarious situation.

Highlighted in posts by members of the local crypto community, there are a few indicators of concern surrounding Patricia’s introduction of PTK. The token is absent from major cryptocurrency aggregators like CoinMarketCap and Coingecko. These platforms offer comprehensive details about tokens, including their real value, issued quantity, contract address and launch blockchain.

Related: Nigeria to issue verifiable blockchain certificates for NYSC

PTK does not exist on widely adopted blockchains used by exchanges for launching their native tokens. To illustrate, PayPal’s newly introduced stablecoin, PYUSD, is accessible on the Ethereum blockchain, the platform on which it was introduced.

In its statement on X, Patricia disclosed its plan to convert outstanding balances to PTK without obtaining customer consent. This unilateral action has raised concerns, as many worry about their ability to exchange the token for fiat currency or alternate cryptocurrencies like bitcoin.

If customers initiate withdrawals in large numbers, a surge of withdrawals could lead to PTK losing its peg, potentially leaving those who couldn’t withdraw stranded.

Magazine: Deposit risk: What do crypto exchanges really do with your money?