Uprise, a South Korean crypto investment platform, has reportedly lost about 99% of its customers’ assets worth around $20 million when it got liquidated shorting the Terra Classic (LUNC).
A couple of hours ago, a local news outlet reported that Uprise’s Artificial Intelligence (AI), which it describes as a robo-advisor, made a grave mistake on LUNA token – now LUNC – as it crashed from around $60 to fractions of a cent.
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The system shorted the LUNC token but got liquidated along the way, resulting in the liquidation of $20 million in customer funds. The firm also lost a total of $3 million of its own funds. This represents about 99% of its assets.
Most users of Uprise’s Heybit service are high-net-worth individuals and corporations who stake their crypto for yield generated by the AI trading on futures markets. The firm has been backed by the Hashed crypto investment firm, Kakao Ventures, and several banks and venture capital firms.
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Although the firm has not issued an official statement in relation to the current situation, it has suspended its usual services.
An Uprise official who spoke with Seoul Economic Daily said:
“Due to great unexpected volatility in the market, there has been damage to customer assets. We plan to finalize the report on our virtual asset business soon.”
In addition to officially notifying its users, Uprise officials are reportedly working on a compensation plan for its customers so that it can continue to operate.
Seoul Economic Daily also stated that it has not registered as a virtual asset service provider (VASP). It reported that Uprise officials feel that the firm is able to avoid the law requiring it to register as a VASP because it does not collect Korean Won nor directly invest in virtual assets, only futures.
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