Per a report from Sedaily, the trading arm of Korean startup Uprise has lost of all its clients’ funds. It was used to trade futures contracts by institutions and wealthy people via artificial intelligence (AI).
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Uprise claimed that its AI trading software was high operating stability and an alternative to high-risk risk management. In addition to losing its clients’ funds, the company was reported to record a loss of around $30 million from its own capital.
Uprise has an AI trading platform, and also a platform for crypto trading. Users are encouraged to deposit cryptocurrency to trade with Uprise’s tool or to earn an annual percentage rate (APR) by holdings the assets on the exchange.
According to local media, the platform still has not informed its clients about this alleged loss. According to the report, the trading AI took short positions in the failed cryptocurrency LUNA. This was allegedly due to market volatility.
LUNA was Terra’s former native token which operated with a burning/issuance mechanism linked to the failed algorithmic stablecoin UST. Terra users had the ability to get a 20% interest rate on their UST deposits through the Anchor Protocol.
Both UST, and LUNA were both destroyed in less than two week. They lost more than 99%. Uprise was not the only company that suffered from the Terra ecosystem collapse.
Three Arrows Capital, a crypto-lending company Celsius and BlockFi were forced to close their LUNA portfolios after the fallout. They also lost millions of dollars. The crypto market is now experiencing a much steeper downturn.
The report adds that Uprise “explained” and “informed” their users “in advance” about the high-risk nature of their product and about the “high possibility of a loss of principal” capital. South Korean law enforcement and regulators could intensify their inspection of this digital asset class.
Crypto markets still recover from LUNA collapse
According to reports, the South Korean startup failed to register as Virtual Asset Service Providers (VASP). This could mean that it may have taken illegal steps.
South Korean officials have not made any official statements at the time this article was written. Uprise did confirm Sedaily’s report. The spokesperson said that Uprise confirmed the report.
Unexpected volatility on the market has caused damage to customer assets. The report regarding virtual assets business will be completed soon.
Reports suggest that customers may be entitled to compensation from the company for losses. South Korean authorities are currently investigating the circumstances that lead to the LUNA crash. This is why it could be criticized if the startup fails to provide its customers with a full refund.
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At the time of writing, BTC’s and larger cryptocurrencies are still trying to reclaim higher levels. As Uprise and other companies come out, the Terra fiasco could put greater pressure on digital assets.
