As per recent reports, the South Korean digital asset investment company Uprise has lost around 99% of its assets, worth $20 million. The reason behind this major loss was it getting liquidated, shorting the LUNA token. The trading desk of the company, Heybit, uses an AI trading system that aims to reduce the risks associated with leveraged trading.
The local news outlet Seoul Economic Daily claimed on July 6 that Uprise’s AI, or “robo-advisor,” made a very bad error in May when it misunderstood the LUNA token as it plummeted from $60 to cents. The system shorted LUNA but got liquidated along the road due to the token’s strange price spikes, resulting in $20 million in losses for the clients and $3 million for the system itself. Uprise lost nearly all of its assets in total.
Uprise confirms the loss
High net worth individuals and businesses who stake their cryptocurrency for the income produced by AI trading on futures markets make up most of Uprise’s Heybit service users. The Hashed crypto investment group, Kakao Ventures, as well as a number of banks and venture capital organizations, have all backed the company.
Despite halting services, the company has not formally informed its clients of the losses. An official from the company confirmed:
“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.”
Uprise authorities are reportedly working on a compensation system for its clients in addition to formally notifying its consumers so that it may continue to operate.
The Terra issue and its following contagion have caused large losses, according to Uprise, the most recent centralized crypto service provider, to disclose them. It joins the list of companies that have had to take dramatic measures to attempt and stay viable, which also includes BlockFi, Celsius, and Voyager Digital. BlockFi has an option to be purchased by the FTX US exchange, loans are being repaid by Celsius, and Voyager filed for bankruptcy on July 5.