Anthony Watson, Bitreserve/Uphold CEO Bitreserve/Uphold The CEO of fintech startup Uphold told Business Insider it is doing everything "by the book" after a Reddit post drew attention to the fact that it is holding over $100 million (£69.7 million) of a speculative virtual cryptocurrency issued by a separate company set up by Uphold's cofounder.

Uphold is a startup that lets people store regular currency, digital currency, and precious metals in digital wallets. Clients can easily switch between assets for low fees.

It was the subject of a thread published on Reddit on Sunday that gathered more than 140 comments. The original poster later took back his comments, which falsely questioned Uphold's solvency, and only signed up to the website on the day he posted.

The thread drew attention to the fact that Uphold currently holds $116 million (£80 million) of a digital currency named "Voxel" in accounts on behalf of clients. Several other Reddit commenters picked up on this large deposit base.

Voxel is an as-yet untradable currency built for a virtual reality marketplace that hasn't launched yet. Total client deposits on Uphold are $124 million (£86.4 million). Only $5.8 million (£4 million) are deposits in non-Voxel currencies and assets.

Uphold keeps all clients funds in accounts rather than investing or lending some out. But it doesn't hold all the value deposited with it in the same asset class as it was deposited in — so you could make a deposit in Chinese yuan but Uphold may hold the equivalent value in US dollars.

That lead some Reddit posters to worry that people who had deposited other currencies and assets with Uphold would be exposed to the volatility of Voxel, a highly speculative currency.

Uphold's Transparency page shows $116 million of Voxel in its reserves. Uphold

Uphold CEO Anthony Watson says this is not the case. He says illiquid assets like Voxel are segregated from general funds. He told Business Insider: "When you net out the Voxel [deposits], we're still over-reserved."

"The reason why we have a large amount of Voxel on our platform is because we are the only company, so far, that allows you to hold Voxel in your digital wallet. At the end of March, early April, 7 exchanges will start openly trading Voxel and then it will be driven by the marketplace."

He added: "Let's say Voxel goes to zero tomorrow — no one's interested in it, no one wants to buy it. That makes zero difference to us. We're simply holding it in wallets. We're not actively trading it and we're not actively backing the asset either."

Uphold's founder and chairman, Halsey Minor, is also the cofounder and chairman of Voxelus, the company that issued Voxel. Voxelus is building a platform a little like a virtual reality Minecraft, which lets you build VR stuff. Voxel will be the digital currency used to buy and sell assets on the platform, like in-game add-ons.

Uphold announced in a blog post last October that it was partnering with Voxelus to "create, distribute & support their proprietary currency."

Halsey Minor, chairman and co-founder of both Uphold and Voxelus. Bitreserve Minor's involvement in the Voxelus venture wasn't disclosed in the post on Uphold's website announcing its partnership with Voxelus.

But Uphold CEO Anthony Watson insists "there is no conflict of interest" with the two companies working so closely together. Watson, a former Barclays, Citi, and Nike executive, told Business Insider: "Voxelus is a separate company not related to Uphold, nor has Uphold invested in it in any way shape or form. Uphold is simply partnering with Voxelus.

"We've done this by the book and I'm very comfortable as the CEO of the company that there is no conflict of interest. Nor are the companies even engaged with each other at a management level. Halsey, as chairman of Uphold, only has one vote out of a board of seven people."

Voxelus raised 1,200 bitcoins — around $507,500 or £352,700 at today's exchange rate — by selling its cryptocurrency Voxel in a crowdfunding last year. Uphold's transparency register shows it is currently holding $116 million worth of Voxel in its digital wallets, with Voxel currently marked at $0.64.

It's not clear who owns the vast majority on the platform but Watson confirmed Minor and other Voxelus executives are major holders.

Watson admitted: "We could have done a better job explaining what it was overall, but in terms of Halsey's role, in terms of Voxelus vs. Uphold, there is no conflict of interest, there is no deviation of duties, we've completely segregated them."

Uphold also hedges clients' non-Voxel deposits so their accounts don't lose value. But Voxel isn't involved in that hedging activity, it's completely separate, Watson says. "If you look at the broader hedging strategy, we do have quite complex algorithms that we use on a 24/7 basis, depending on what currencies people are focused on and how people are focused on them."