BD Insider 180: Examining the controversies with “Patricia Token”

In today’s letter, we cover:

• the conversion of customers’ assets into “Patricia Token”
• Nigeria’s plan to probe directors at Eyowo
• the latest on Chipper Cash valuation cut

And other noteworthy information like:

• the latest African tech startup deals
• opportunities, interesting reads, and more

The big three

#1. Patricia replaces customers’ assets with a newly launched native token

The news: Nigerian crypto exchange, Patricia has launched a native token, “Patricia Token” (PTK). As part of the launch, the exchange says the token will replace its customers’ assets which were previously held in Naira or Bitcoin.

Patricia claims that 1PTK is equal to $1. “PTK is our stable value coin backed by the U.S dollar,” the company said in a statement on Saturday.

Currently, PTK is not available on the major global crypto aggregators such as CoinMarketCap, CryptoCompare, and CoinGecko; or on Blockchain like Ethereum where exchanges launch their tokens. Neither is there a whitepaper.

The controversy: Due to the lack of transparency in the launch of PTK and the conversion of assets, several users and public commentators have described the move as a scam and illegal.

“Converting customers’ balances to PTK without their consent looks very bad on Patricia. In fact, according to Securities Exchange Commissions (SEC) guidelines, any entity launching a token to be used by Nigerians must first submit a roadmap of the token to SEC,” says Bolu Abiodun, a Blockchain Reporter at Techpoint Africa. “If Patricia meant no harm with the launch of PTK, the execution might have killed the project before it even took off.”

Zoom out: In 2022, SEC said that entities that intend to offer crypto-related services or products in Nigeria must secure a Virtual Asset Service Provider (VASP) licence. It is unclear if Patricia has been licensed by the commission.

Recently, SEC banned the operations of Binance in Nigeria, stating that: “Binance is neither registered nor regulated by the Commission and its operations in Nigeria are therefore illegal”.

Patricia is yet to respond to users’ or the media’s requests for comments.

#2. Nigerian authorities to probe directors at Eyowo and other “failed banks”

The news: The Nigeria Deposit Insurance Corporation (NDIC) says it plans to probe directors and officers of Nigerian fintech, Eyowo, and 182 other Microfinance Banks and Primary Mortgage Banks whose licenses were revoked by the Central Bank of Nigeria (CBN) in May.

Bello Hassan, the CEO of NDIC disclosed this last week during a workshop for law enforcement operatives and officers from regulatory agencies in Lagos.

Why it matters: The “Nigerian Failed Banks (Recovery of Debts) and Financial Malpractices in Banks Act” requires the NDIC to do two things:

• the speedy recovery of debts owed to failed banks arising in the course of business and which remain outstanding as of the date the bank is closed or declared a failed bank.
• the speedy trial of offenses relating to financial malpractices in banks and other financial institutions as specified in the Act or such other offenses relating to the business or operation of a bank under any enactment.

“The Corporation is involved in the criminal prosecution of bank officials and customers suspected of committing banking malpractices as well as the recovery of debts owed to failed banks in order to pay dividends or depositors of the failed banks using the provision of the failed banks Acts,” according to NDIC.

Know more: “We are at the last stage of our appeal processes with the CBN,” Yomi Adedeji, co-CEO of Eyowo, said on an X-Space conversation that was monitored by Bendada.com. However, users are still unable to make withdrawals.

Eyowo says it does not intend to shut down, but there will be a change in its business model that will impact its operations. The fintech company has since laid off 11% of its workforce. “This is necessary to align our processes with the changes happening in our company,” the Eyowo said in a statement.

#3. Chipper Cash’s 409A valuation dropped by 70% in April

The news: Earlier this year, Zepz (formerly known as WorldRemit), a UK-based international money-transfer firm, wanted to acquire Chipper Cash but it made a U-turn citing a lack of financial information from acquiree.

However, Chipper CEO, Ham Serunjogi denies this claim, saying that Zepz was the one who declined to provide its financial metrics, adding that his company provided all that was required.

According to Forbes, “the deal would have valued Chipper at between $250 million and $500 million”. Last year, Chipper Cash’s valuation was reportedly slashed by 37.5%—from $2 billion to $1.25 billion.

The company also laid off over 175 employees and was affected by the collapse of FTX and Silicon Valley Bank.

In April, Chipper lowered its internal 409A valuation–the market value it uses for issuing employee stock options–by 70%, cutting its common stock share price from about $13 in late 2022 to $3.89, according to a former employee and a document viewed by Forbes.

Zoom out: Going forward, Chipper Cash is optimistic that it will return to profitability. “We are laying the foundation for what is going to make us successful over the next 10 or 20 years,” Serunjogi said.

The company has cut down on its spending and has also ceased its European expansion plans.

💰 State of Funding in Africa

Last week, South Africa-based venture builder, Founders Factory Africa secured $144 million from Mastercard Foundation and Johnson & Johnson Impact Ventures.

Since its inception in 2018, Founders Factory Africa has backed over 55 African tech startups, including Mycover ai, OkHi, and Zuri Health. The firm provides up to $250,000 equity capital to early-stage startups and $150,000 catalytic capital in nondilutive funds into portfolio companies.

How many cheques will FFA write with its new fund? Although the estimated number is undisclosed, we will bring you updates when the deployment begins.

Check the table below for more insights into the venture capital activities from last week.

📚 Noteworthy

Here are other important stories in the media:

• CBN returns BDC to the forex market with a new rule: The Central Bank of Nigeria has released new operational guidelines for BDC operators in Nigeria to improve the efficiency of the foreign exchange market. This comes two years after the apex bank suspended the sale of forex to BDCs.
• Moniepoint enters the Nigerian retail banking market: After eight years of operating a B2B model, Nigerian fintech, Moniepoint wants to start offering retail banking services in the country, with the launch of a consumer app and debit card.
• Kobo360 makes top executive appointments: Nigerian logistics startup, Kobo360 has appointed Fola Adeola, Cikü Mugambi, and Ayo Fashina to top executive roles following the resignation of Obi Ozor as CEO.
• African countries rank lowest on the AI readiness index globally: According to a report by Oxford Insights, African countries rank lowest on the AI readiness index globally. However, Mauritius, South Africa, and Seychelles are leading the drive.

💼 Opportunities

Jobs

We carefully curate open opportunities in Product & Design, Data & Engineering, and Admin & Growth every week.

Product & Design

• Amazon — Senior Product Manager, Cape Town
• Wakanow — Technical Product Manager, Lagos
• Curacel — Senior Product Manager, Remote

Data & Engineering

• Clafiya — Mobile App Developer, Remote
• Nomba — Senior Backend Engineer, Lagos
• M-Kopa — Senior Backend Engineer, Lagos/Nairobi/London

Admin & Growth

• Bolt Food — Sales Team Lead, Lagos
• Yassir — General Manager, Lagos
• Brass — Head of Sales, Lagos

Other opportunities

• For Nigerian graduates: Pan-African edtech startup, uLesson is hiring graduates who have completed NYSC and have a minimum of a second-class in any degree.
• For African developers: MTN’s fintech, MoMo is hosting developers and innovators from 15 African countries, including Nigeria, Rwanda, South Africa, Ghana, and Cameroon, to participate in its online application programming interface hackathon. The top three winners will be rewarded with $5000, $3000, and $2000 respectively.
• For tech entrepreneurs: The SaaS Accelerator Programme: Africa 2023 is currently receiving applications for its accelerator program to enable early-stage startups in Africa to receive up to $70,000 in funding.
• Startup Accelerator: Applications have been opened for the Startup Wise Guys SaaS acceleration Africa program. Selected startups will receive up to €100,000 investment for equity with a follow-on possibility. The deadline to apply is September 7, 2023.

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