Uprise, a South Korean crypto enterprise, suffered a $20 million loss after getting liquidated shorting the Luna token. The loss amounted to 99% of the startup’s total assets.
Uprise’s trading desk Heybit uses a trading platform powered by artificial intelligence (AI). Heybit developed the platform to mitigate the risks involved with leveraged trading.
Seoul Economic Daily, a local news outlet, revealed on July 6 that Uprise’s robo-advisor made a fatal mistake. The news indicated that the AI blundered on the LUNA token in May as it plummeted dramatically from $60 to fractions of a cent in value. The system attempted to short LUNA but was liquidated during one of the token’s strange price pumps along the road. This resulted in consumer losses totaling $20 million and the system’s losses amounting to $3 million. This accounts for approximately 99 percent of Uprise’s total assets.
Most Heybit users are high-net-worth individuals and corporations. These customers risk their cryptos in the hopes of receiving a yield generated by the AI’s trading on futures markets.
Kakao Ventures, crypto investment business Hashed, and many other banks and venture capital firms are among the organizations that have provided financial support to the company.
Uprise silently halts operations
The firm has temporarily halted its operations. However, there has been no official communication with its clients on the financial losses. A representative of Uprise has validated the following information for Seoul Economic Daily. He said,
It has come to our attention that some of our clients’ assets have been harmed as a direct result of the unusually high level of volatility in the market. We are working hard to complete our virtual asset business report as quickly as possible.
Uprise representative
There are rumors that Uprise is currently working on a compensation plan for its clients so that the company may continue to operate. This comes from the company’s decision to notify its subscribers officially.
Recently, Uprise has received much attention. In the backdrop of this publicity, Seoul Economic Daily informed readers’ that the firm has not yet registered as a virtual asset service provider (VASP).
It came out that officials from Uprise believe the company can get around the regulation that requires it to register as a VASP. The company neither receives Korean Won nor directly engages in virtual assets; instead, it solely invests in futures. According to them, their mode of operation gave leeway for the operations.
The centralized crypto service provider Uprise is the most recent firm to disclose significant losses due to the Terra event. It now joins the ranks of other entities, such as BlockFi, Celsius, and Voyager Digital. FTX US exchange has the option to buy BlockFi, Celsius has been unwinding loans, and Voyager filed for bankruptcy on July 5. All these firms suffered a Luna effect.
South Korea to collaborate with the US capital fraud investigation
Recently, South Korean Minister of Justice Han Dong-hoon traveled to New York. His goal was to meet with his United States Department of Justice counterparts. Han Dong-hoon discussed how the two states could collaborate on inquiries relating to financial crimes. South Korea is showing concern about the growth of crypto-related crimes.
Scott Hartman, chief of the Securities and Commodities Fraud Task Force, and his assistant met with Han Dong-hoon. The meeting occurred at the United States Attorney’s Office for the Southern District of New York.
According to the journal, the two groups discussed the best ways to share information. They also talked about taking joint and prompt actions on capital frauds related to the virtual asset market.
The two parties agreed to share the most recent material from their investigations about Terra. The collapse of the Terra, which cost 40 billion dollars, is the subject of judicial investigation in both countries. Do Kwon, one of the co-founders of Terra, is currently the subject of a fresh inquiry by the US. Moreover, South Korea is investigating allegations against him, including fraud and tax evasion.
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