At the start of April, Matchpool, a new dating app that pays out cryptocurrency rewards to successful matchmakers, held a highly successful ICO.
In less than 48 hours, the company reached its target of 125,000 ether ($5.8m) and, after posting a celebratory thank you to their supporters, the team started to consider their next moves.
However, on April 5th, two days after the ICO concluded, warning bells were sounded.
A post on /r/Ethtrader and a tweet from cryptocurrency writer and former Coinbase staffer Nick Tomaino spelled out the concerns: the text of a post in the Matchpool Slack channel from co-founder Philip Saunders announcing his departure from the project and casting suspicion on the withdrawal of 37,500 ether ($1.7m) from the Matchpool ICO wallet by CEO Yonatan Ben Shimon.
"Yonatan keeps claiming he's working with Bitcoin Suisse and it's all okay, but so far I haven't seen any evidence of this. I suggest you all demand an explanation and keep a close watch. In all likelihood your guppies [Matchpool's currency token] are worthless."
Redditors and Twitter users were quick to pick up on the thread, and the term 'exit scam' was thrown around, not just on forums but on cryptocurrency news sites.
Had the funds really disappeared? Was Ben Shimon more conman than CEO?
The short answer: no.
Though it might come as a surprise to readers who heard of the story through social media, Matchpool had already announced plans to convert a proportion of the funds from ether into bitcoin prior to the supposed 'scandal' via the firm's Medium blog.
The rationale behind the conversion is that with ethereum's relative volatility – prices have fluctuated between $30 and $50 in the last month alone – could be mitigated with a conversion into the more stable bitcoin.
In a call with CoinDesk, the Matchpool team accepted that a greater effort could have been made to publicise the post at the time.
We also asked Ben Shimon to clarify the authorisation process for the movement of the funds – a contentious point since they were meant to be stored in a multisignature wallet as a guard against any single actor making the decision alone.
In fact, Ben Shimon held two signing keys to the wallet, requiring an additional signature from one of three other people in order to make the transfer. In this case, the third signature came from Stas Oskin, core developer of the Wings ethereum DAO platform.
Oskin confirmed that he had authorised the signature in an email to CoinDesk, adding:
"[Hedging] seemed completely reasonable, in fact we advise a similar strategy to any project planning to launch on Wings."
Even if claims of financial mismanagement are unfounded, the dramatic exit of a co-founder is never something that reflects well on a company.
CoinDesk reached out to Philip Saunders for this article, but had not received a response by time of publication, meaning his perspective is absent from the narrative. Still, according to Matchpool's remaining team, he had not delivered on work that was expected from him ahead of the ICO.
In a blog post written after Saunders' exit, Ben Shimon accuses his co-founder of providing smart contract code that was rejected in an audit as having too many errors, and needed to be rewritten from scratch by Parity in order to be usable.
Parity did not respond to CoinDesk's request for comment on the story, but until and unless more information comes to light, the onus is on Saunders to prove any further allegations of mismanagement on the part of the Matchpool team.
While any kind of scandal is damaging to a new company, and reputations can be difficult to repair once damaged, Matchpool now has the resources to move on into the build and prototyping phase. This process will be spearheaded by incoming CTO Or Demri, previously a software developer for the Israeli Air Force and a former consultant to various companies in the cryptocurrency space.
In his first public communication for the company, Demri laid out the development plan for an alpha launch of the product in Q3 of 2017 – an event that many investors will have their eyes on as a key indicator of the company's ability to deliver on its promises.
"My mission is to give the community and all the contributors the best product, and deliver what Yonaton has promised – that's my target," Demri said.
CoinDesk also contacted Joe Shapira, founder of popular Jewish dating site JDate.com and a member of Matchpool's advisory board, who confirmed his active involvement and continued support for the project, adding:
"I think that Matchpool will be a very beneficial venture for its founders and the investors in its currency."
It's been a bumpy ride from the heights of the ICO to the allegations of a scam, but now the message from Matchpool is: we're here to stay.
Lovers in pool image via Shutterstock