Despite only telling users about a breach on its retail trading app this week, several sources with knowledge of the matter say that the incident happened in 2022 and cost the company $2 million.
The retail trading app, Patricia, froze withdrawals for users of its platform this week. In an email to customers explaining the decision, the company said it suffered a breach. Part of the email read, “Not long ago, we were victims of a hack. Patricia, the retail trading application, was solely affected by the breach. BTC and Naira assets were compromised.” The company claims that it has identified the source of the breach and is now taking legal action against the “syndicated group.” Based on conversations with three sources with direct knowledge of the situation, TechCabal can exclusively report that the breach on the Patricia app happened in January 2022 and that the company reportedly lost $2 million in the incident. When TechCabal contacted Patricia to understand the extent and timeline of the breach, the company’s CEO, Hanu Fejio, declined to comment.
Three sources who asked to remain anonymous and have first-hand knowledge of the matter told TechCabal that Patricia partially froze withdrawals when the breach happened in January. While customers could still deposit money into the app, they couldn’t move their crypto coins to other wallets. Instead, Patricia offered to buy those coins from customers and pay them cash to manage the situation. This workaround continued until March 2023.
A self-inflicted bank run?
Sources say that Patricia launched a new version of its app in April and opened it to users. On Instagram, the company said the new app, Patricia Plus, was necessary “due to a global congestion on the Bitcoin blockchain.” The new app had no withdrawal restrictions, and within a few minutes, users started to move their coins to other wallets, forcing the company to reinstate a freeze. The situation they described closely resembled a bank run, and with liquidity concerns, sources said that the company’s custodial wallet had a deficit of 75 BTC. Patricia declined to comment on those claims. Instead, Patricia told customers in an email that it is now undergoing internal restructuring.
While it did not share any restructuring details, several company sources said management called a meeting last week and explained the liquidity situation. The company’s leadership also shared that it would begin another round of layoffs.
More layoffs at Patricia
While Patricia’s retail trading app has an estimated 160 employees, sources say the company laid off staff separately in 2022. At the time, the company did not share the reasons for the layoffs with employees. In a company-wide meeting last week, Patricia’s leadership said it would begin another round of layoffs. Sources say that team leads were told to reduce their team sizes by as much as 80%.
While Patricia did not respond to questions about layoffs at the time of this report, sources said those affected by the latest layoffs would receive emails between Friday and Monday. It has created a situation where there’s some uncertainty about the people who will still have their jobs at the company next week.
*This is a developing story