During the collapse of Korean Uprise crypto in May, reportedly lost $20 million in a short bet on Luna. When Uprise crypto went short on Terra’s LUNA on the futures market after the network’s collapse, the “robo-advisor” trading product was liquidated for nearly all of the platform’s assets. You can learn why did Terra Luna crash, by visiting our article.
By shorting luna (LUNA) during its price drop and being caught on the bounces, Korean cryptocurrency firm Uprise effectively lost all of its client assets, according to an article published on Wednesday in Seoul Economic daily.
The Korean company claimed to trade cryptocurrency on behalf of its clients using AI-enabled automatic trading algorithms. One component of the company’s Heybit service is its trading desk, and the other component is the Iruda global exchange-traded fund platform.
Uprise crypto: $20 million loss
Sedaily reported on Wednesday that almost 99 percent of the platform’s assets under management, or $20 million, were lost by the Korean cryptocurrency platform. According to the report, the company’s robo-advisor product powered by artificial intelligence, nicknamed HEYBIT, experienced a liquidation when betting against the price of LUNA during a time when the cryptocurrency dropped to practically zero.
About 99 percent of the money that Uprise was handling for its clients is represented by the lost money. According to the research, these clients include high-net-worth individuals and business organizations. Additionally, it has been stated that Uprise lost $3 million by shorting LUNA.
According to reports, Uprise crypto is thinking of compensating impacted clients in some way. “It is true that damage to customer assets has occurred due to unexpected great volatility in the market. We plan to finalize the report on [the] virtual asset business soon,” said a spokesperson for the company.
Under Heybit, Uprise crypto purchased customer-owned cryptoassets and exchanged them on the market for cryptocurrencies in the future. The risk involved with leveraged crypto trading was meant to be reduced by Uprise’s AI-enabled trading technology.
The firm lost 26.7 billion won ($20 million) when its LUNA futures trading position was liquidated, despite the system’s best efforts. This took place when the price of Luna crashed. It reportedly shorted Luna as its price fell, but it was caught off guard by unexpected price spikes along the way.
A death spiral occurrence that resulted in the price of the protocol’s volatile token, LUNA, falling from about $77 to almost $0 in less than a week was caused by Terra’s main stablecoin, UST, depegging from its intended parity with the dollar on May 7.
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As a result, the crypto market lost approximately $40 billion, which affected the whole industry and eventually caused severe liquidity and solvency concerns for several significant crypto firms, including Three Arrows Capital, Celsius, Vauld, Babel Finance, and CoinFLEX.
Uprise crypto went bankrupt by betting against the price of LUNA, in contrast to the majority of other crypto businesses that either got caught by having long exposure to LUNA and UST or by the financial contagion resulting from the collapse. When traders make “long” bets in the financial markets, it means they think the asset’s price will rise in value. On the other hand, traders who predict a decline go “short.”
Some of the sponsors of Uprise include the large Korean commercial lenders Hana Bank and the giant Korean venture capital firm Kakao Ventures. In December 2021, the company completed a Series C fundraising round, raising around $18.3 million.
The LUNA collapse has had an effect on Uprise crypto, the most recent cryptocurrency company. Along with its sibling token TerraUSD (UST), the token’s death spiral in May has caused major financial issues for lenders and hedge funds alike, including Three Arrows Capital and Celsius.
Informed about potential risks
According to Uprise, their algorithmic trading product only took deposits from high-net-worth individuals, professional investors, and investment companies. Prior to losing the money, the company purportedly asserts that it has warned its clients about any dangers associated with the platform’s trading strategies.
An UPRISE official quoted in the Sedaily report claims that the struggling firm is thinking about implementing a client compensation scheme.
