South Korean cryptocurrency investment platform Uprise reportedly lost around 99% of its assets, worth around $ 20 million, upon liquidation triggered by the shorting of the Luna Classic (LUNC) token.
Uprise’s Heybit trading desk uses an artificial intelligence (AI) trading system designed to reduce the risks associated with leveraged trading.
Yesterday, the local news outlet Seoul Economic Daily reported that Uprise’s artificial intelligence, dubbed a robo-advisor, allegedly made a gross misreading on LUNC in May, dropping precipitously from $ 60 to fractions of a cent. The system would have shorted LUNC, but would have been liquidated during the violent price swings of the token, causing $ 20 million in customer losses and $ 3 million in own losses. In total, Uprise would have thus lost about 99% of its assets.
The majority of users of Uprise’s Heybit service are high net worth individuals and companies who stake their cryptocurrencies in order to obtain a return generated by trading AI on futures markets. The firm has received investments from Hashed companies, Kakao Ventures and several banks and venture capital firms.
The company has suspended services, but has not officially communicated the losses incurred to its customers. A Uprise official confirmed to the Seoul Economic Daily that:
“Due to the large and unexpected volatility of the market, damage to client assets has occurred. We plan to finalize the report on our virtual assets soon.”
In addition to officially informing its users, Uprise officials would be committed to a repayment plan of its customersso you can continue to operate.
With Uprise in the spotlight, the Seoul Economic Daily stressed that it has not registered as a virtual asset service provider (VASP). The newspaper also reported that Uprise officials believe the company is able to circumvent the law by avoiding registration as a VASP, as it does not accumulate Korean won or invest directly in virtual assets, only in futures.
Registration helps keep crypto exchanges in compliance with the infamous Travel Rule della Financial Action Task Force.
Uprise is the latest centralized crypto services provider to reveal significant losses resulting from the Earth accident and subsequent contagion, joining BlockFi, Celsius and Voyager Digital, forced to take drastic measures to try to stay afloat. The FTX exchange has put forward an intention to buy BlockFiCelsius is cutting back on loans as Voyager filed for bankruptcy on Tuesday.
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