Digital currency exchange Prelude, a sub-service of Moolah.io, has released a preliminary audit of its dogecoin balances as part of a larger drive to become more transparent about its finances.
The evaluation shows that Prelude had approximately 160m dogecoins (about $72k at press time) on its service, roughly 158m of which are customer funds. The company provided a link to the dogecoin block chain verifying that the funds were under Moolah’s control.
The audit was conducted internally, and according to the company, a separate third-party assessment is forthcoming.
Moolah originally confirmed it would conduct an audit of its Prelude exchange service last week via r/dogecoin and Twitter.
We will have a full audit and transparency procedure in place by May 5th. 🙂
— Moolah (@moolah_io) April 30, 2014
Moolah also froze USD deposits on its service today, but indicated that this was part of a scheduled transition to its new banking provider.
The company expects USD deposits to resume within 48 hours.
In addition to the preliminary audit, the forthcoming third-party audit will reevaluate Prelude’s DOGE balances. Further, a bitcoin audit of the site’s funds is expected on 6th May.
Though no timeline for the third-party audit was given, Moolah CEO Alex Green told CoinDesk that the company has “reached out to a number of key individuals to replicate the process”.
Green said that the audit has been in the works for some time and that this type of practice should become standard among digital currency exchanges. He has also promised to issue more regular updates regarding its account holdings, adding:
“I feel personally that all exchanges should be doing this, simply to further build trust in digital currencies. People have been burned a lot in the past 12 months, and it is up to each and every exchange to regain their trust.”
Inquiries spark audit
The release of the audit was partly in response to questions raised on reddit by some of the site’s users. The postings focused on alleged irregularities in the company’s public statements and information regarding its financial health.
However, follow-up reports led to suggestions that the posting could have been part of a campaign to impact Moolah’s legitimacy.
Subsequent posts on the bitcoin and dogecoin subreddits sparked a heated debate, which drew in Green and other prominent members of the dogecoin community.
Green later apologized for his statements in a blog post, and told CoinDesk:
“I released a large quantity of information in response to the post (a Q&A), and would be the first to admit that my first reaction may have been construed as childish.”
Though the announcement is a step toward transparency for Moolah, which closed its second seed round in March, there are still questions about its long-term business model.
For example, the company does not charge for its services, though it says it is exploring various ways to monetize. Nonetheless, Moolah has styled itself as a competitor to Coinbase that emphasizes the popularity of dogecoin.
The audit notably coincided with Moolah’s announcement that it would add ACH (Automated Clearing House) support in the US and UK.
For more on how digital currency companies are conducting audits, read our full report.
Image via Moolah.io