The FTX collapse shook the global financial and cryptocurrency industries a year ago. Sam Bankman-Fried trended for all the wrong reasons. He has been accused of misleading everyone while he created his cryptocurrency empire at FTX, save his friends and girlfriend. Sadly, Hanu Fejio’s Patricia is giving us similar vibes.
Patricia became a top bitcoin investing platform in Nigeria, in large part because to its energetic and young CEO, Hanu Fejiro. Due to his high-profile lifestyle, which includes opulent travel, expensive spending on Tesla automobiles, and ambitious endeavors like sponsoring Big Brother Naija, he is well-known to have a sizable following in the Nigerian crypto community.
These could have impacted how the general public perceived the platform’s dependability and security. There have been concerns regarding whether important commercial factors received enough consideration when these projects were being pursued. However, people were carried away by the energy the business gave out.
When LazerPay shut down earlier this year, poor success management and a lack of a capable management team were listed as some of its woes. Undoubtedly, these are signs that we have seen from both Hanu Fejiro’s Patricia and Bankman-Fried’s FTX.
Some Striking Similarities
Patricia’s current situation may result from a number of variables rather than one single reason. Just like the FTX, Patricia had risen rapidly and had everyone glued to its services. In 2022, Fejiro asserted that Patricia had contributed to financial inclusivity, job creation, and the development of a talent-based economy in Nigeria. The CEO also outlined the creation of new wealth among young Africans.
Bankman-Fried had high expectations for FTX. In 2022, the firm had surpassed $1 billion in sales and represented 10% of trade in the global cryptocurrency market. Bankman-Fried had high expectations but obviously lacked corporate control. These are similar features we are seeing in Hanu Fejiro.
Impulse Funding
Building a successful cryptocurrency platform necessitates knowledge of strategic decision-making. While it is possible that fintech startups can choose to market their products to the masses in unprecedented ways, sponsoring Big Brother Naija (BBN) for two consecutive seasons might have been overly ambitious for Patricia.
For Bankman-Fried, he did not have to sponsor shows; he bought his way to the top. Bankman-Fried chose to purchase licenses through acquisitions rather than apply for each one, which might take years. The tactic had its limitations, too, as the records reveal: on occasion, the companies it acquired lacked the particular permits it required.
Extravagant Lifestyle
Sponsoring Big Brother Naija and other unrelated endeavors were indications of careless spending and resource misallocation. Patricia may have been able to invest in strong security measures or react to unforeseen events if its financial resources were managed carefully. This is similar to the allegations against Bankman-Fried.
According to Nathan Rehn, an assistant US attorney, Bankman-Fried was committing massive fraud and taking billions of dollars from thousands of victims. FTX’s collapse shook the volatile crypto market. What shook the media was that Bankman-Fried had to submit to mental health and substance abuse counseling.
Hide and Seek
In August, the assets of Patricia’s customers were transformed into a debt management token called the Patricia token by Patricia. Customers were outraged by the unexpected arrangement.
In September, the firm moved to raise new funding so it could repay customers. In October, the firm offered customers the option to convert their balance into Patricia shares. Expectedly, several customers have been agitated as they have not been able to withdraw their money from the crypto exchange in over six months.
Patricia’s hide-and-seek story is just a replica of Bankman-Fried’s FTX prior to its collapse. In November last year, when FTX was having trouble raising money, it seized billions of dollars worth of collateral from its trading arm, Alameda Research, and used it to try to reassure investors of its financial stability.
However, a lot of stuff didn’t add up. Investors did not want to be part of the inconsistencies. The following day, FTX filed for bankruptcy since no investor stepped forward to save it.
The report is speculative, and based on the information that is currently available. However, the fact is that the Entity concept of accounting is an important business principle. Founders ignore it at their own peril.
