Moopay LTD, the digital currency services business better known as Moolah, has announced that it is shutting its doors and filing for bankruptcy protection.
The move follows the failed relaunch of the MintPal altcoin exchange, which, after weeks of preparation, was marred by chronic user and platform issues. According to Moolah, its closure stems from an unexpected rise in operational costs and the loss of critical business partnerships in the past month.
In its announcement, Moolah said that customer funds are secure and that users of its consumer and merchant money management platform can process withdrawals until 31st October, after which time Moolah will shut down.
The company also said that MintPal will continue to operate as a separate business, but prior to the appointment of a new leadership team will be put offline in order to address what the company called “critical errors” in the platform’s security infrastructure.
At press time, the MintPal website was not accessible and contained a message reading that the new leadership, once in place, will release a statement.
Moolah CEO and founder Alex Green said that it no longer had the funds to continue functioning as a business after incurring high legal and operational costs during the past 10 months.
He told CoinDesk:
“Quite simply, we ran out of cash. Rather than end up in massive amounts of debt, we made the decision to close down the business. We can no longer afford to pay our operational and staffing expenses, and we feel that we have made the best decision all around.”
Moolah’s shutdown ends a long chapter for both the dogecoin and altcoin communities, as the United Kingdom-based company was a significant provider of services to the dogecoin userbase and had invested heavily in the relaunch of MintPal, which suffered a debilitating hacking attack earlier this year.
The startup was not without controversy though, as tensions between Moolah and members of the altcoin community often played out online for all to see.
The closure itself sparked a social media firestorm, with users taking to the dogecoin subreddit, Twitter and IRC to both search for answers and weigh in on the developments. Many customers of both Moolah and MintPal expressed fear that the closure would affect withdrawals from both platforms.
Canceled deals triggers crisis
In its bankruptcy announcement, Moolah said that efforts were made to secure new revenue streams, which included a last-ditch attempt to build partnerships in Asia.
The company said:
“A number of the team have spent the past 10 days in Asia (personally funded, not company funded) attempting to secure vital contracts that would ensure the future of the company, but these attempts proved fruitless given general opposition by the businesses in question into entering into agreements with non-Asian companies.”
According to Green, Moolah’s expenditures included $45,000 per month in labor costs, along with an additional $22,000 in legal and operational expenses. He added that the company does not hold substantial amounts of debt, but owes some of its suppliers for past payments.
Green left the door open to a potential future for the company, telling CoinDesk that in the days ahead alternative options to closure will be explored.
“We will be waiting until the last possible moment to fully wind down the company, in order to explore any and all avenues that may present themselves,” he said.
He added that Moolah is seeking to retain a company to assist it in winding down its operations and transition to a new management team, saying that several outside parties have expressed interest in Moolah’s technological portfolio as well as the company itself.
Future uncertain for investors
For now, some of the biggest questions surrounding the Moolah shutdown focus on the future of those who took part in the investment initiative it ran.
The company offered few details on the future of funds owed to investors in its so-called PIE program, which raised 750 BTC during three investment rounds and sparked controversy within the dogecoin community. Moolah said that it expects to liquidate its assets and pay off creditors, after which “the remaining funds will be divided accordingly between investors in the company”.
Many of the investors in the PIE initiative came from the dogecoin community, and the altcoin’s subreddit has seen an influx of comments from stakeholders concerned about what, if any, restitution they might receive following bankruptcy.
Dogecoin co-founder Jackson Palmer told CoinDesk that the Moolah closure demonstrates the risks of crypto crowd sales and the businesses that conduct them. Calling the practice “a legal grey area and a possible minefield”, Palmer reiterated his past opposition to Moolah’s past actions.
“What saddens me the most is that Moolah took their funding from random Internet-goers as opposed to rich venture capitalists who can afford to take the risk and financial hit. These ‘investors’ are now in a position where they’ll never see their money again, and have minimal legal recourse.”
He added that he expects incidents like the Moolah closure will trigger involvement from financial regulators, particularly securities and investment watchdogs like the US Securities Exchange Commission (SEC). However, Palmer predicted that the dogecon community will recover and “come back fighting”.
“At the end of the day, it’s a stark reminder to always investigate who you’re doing business with prior to entrusting your money with them,” he said.