Uprise, a South Korean company platform for cryptocurrency investments, purportedly lost nearly 99 percent of its assets, or $20 million, when it was forced to liquidate shorting the Luna Classic (LUNC) coin.
The trading desk of Uprise Heybit employs a trading system using artificial intelligence (AI) that was created to lessen the risks involved with leveraged trading.
Seoul Economic Daily, a local news source, stated on Wednesday that Uprise’s AI, which it refers to as a “robo-advisor,” made a terrible error in May on LUNC as it plummeted sharply from $60 to pennies.
The system shorted LUNC but was liquidated along the road because of the token’s strange price spikes, resulting in $20 million in losses for the customers and $3 million for the system itself. Nearly all of Uprise’s assets were lost altogether.
High-net-worth people and businesses who stake their cryptocurrency for the return produced by AI trading on futures markets make up the majority of customers of the firm’s Heybit service. The Hashed cryptocurrency investment group, Kakao Ventures, as well as several banks and venture capital organizations, have all funded the company.
Uprise has not made a formal announcement about the losses
Despite suspending services, the company has not formally informed its clients of the losses. That was confirmed by an Uprise representative to Seoul Economic Daily.
“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 apparently working on a compensation scheme for its clients, in addition, to publicly informing its consumers so that it may continue to run.
The Terra issue and its following infection 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 to stay viable, which also includes BlockFi, Celsius, and Voyager Digital.