South Korean crypto startup Uprise has shorted LUNA as the altcoin price drops. Uprise subsequently liquidated its LUNA futures and lost $20 million in client funds. This amount corresponds to 99% of client funds. Uprise officials made a statement regarding customer losses.
Uprise shorts on LUNA, loses in altcoin price jumps
South Korean crypto startup Uprise shorted Luna (LUNA) during the price crash, the Seoul Economic newspaper reported on Wednesday. However, it caught spikes and lost almost all client funds. The Korean firm says it uses automated trading strategies with artificial intelligence (AI) to trade crypto on behalf of its clients. This trading desk is half of the company’s service called Heybit, and the other half is the global exchange-traded funds platform called Iruda.
Under Heybit, Uprise received crypto assets stored on behalf of clients. He then traded on the cryptocurrency futures market. Uprise’s AI-enabled trading technology was supposed to minimize the risk associated with leveraged crypto trading. However, the system failed to prevent the firm from being liquidated from its LUNA futures trading position. It caused him to lose 26.7 billion won ($20 million) in the process. This happened during the price crash of LUNA. According to sources, he shorted LUNA as its price fell. However, he was caught in sudden price pumps along the way.
What action will Uprise take for customer losses?
Lost funds represent approximately 99% of funds that Uprise manages on behalf of its clients. According to the report, these customers are high-net-worth individuals and legal entities. Uprise also reportedly lost $3 million in short trades of LUNA’s own funds. Uprise is reportedly considering some form of compensation for affected customers. According to the Seoul Economic newspaper, a spokesperson for the company made the following statement:
It is true that client assets were damaged due to unexpectedly large volatility in the market. We plan to complete the report on the virtual asset business soon.
Crypto startup has strong backers
Korean venture capital giant Kakao Ventures and major Korean commercial lender Hana Bank are among Uprise’s backers. The firm raised approximately $18.3 million in its Series C funding round in December 2021.
Uprise has become the latest crypto firm to be affected by the LUNA collapse. As you follow on Kriptokoin.com, the death spiral of the token in May hurt a lot. LUNA, along with TerraUSD (UST), has triggered serious financial problems for hedge funds and lenders, including Three Arrows Capital and Celsius.
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