Image service PNG distortion

I have a weird issue with the image service. It seems to not handle PNG’s with transparency very well, even when set to a size higher than the original image the transparency is heavily distorted.

Original image:

Image served through image service with size set to higher than the original:

Did a bit of trial and error and it seems that any width any other than the original has this effect.
I guess I’m missing something here, but can’t figure it out. Any feedback would be very helpful!