How This Firm Lost 99% of Client Funds Shorting LUNA

to Report The trading arm of South Korean startup Uprise from Sedaily has lost all of its clients’ funds. Wealthy individuals and institutions use the platform to trade crypto futures contracts through artificial intelligence (AI) tools.

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According to the report, Uprise touts its AI trading tool as a high operational stability and high risk management alternative. In addition to losing client funds, the company reportedly lost about $30 million from its own capital.

Uprise operates an artificial intelligence trading platform and a cryptocurrency trading platform. Users are encouraged to deposit cryptocurrencies to trade with Uprise’s tools, or earn an annual interest rate (APR) by holding assets on the exchange.

Local news outlets said the platform has yet to inform its customers of the alleged huge losses. Trading AI placed several short positions on the failing cryptocurrency LUNA and was negatively affected by market volatility, the report said.

LUNA is Terra’s previous native token, which operates using the burn/issue mechanism associated with the failed algorithmic stablecoin UST. Through the Anchor protocol, Terra users are able to earn 20% APR on their UST deposits.

In less than two weeks, both UST and LUNA have lost more than 99% of their value. Uprise isn’t the only company negatively impacted by the collapse of the Terra ecosystem.

The fallout forced crypto hedge fund manager Three Arrows Capital (3AC), crypto lending firm Celsius, BlockFi and others to liquidate their LUNA positions, losing millions. As a result, the crypto market has experienced more downside.

The report added that Uprise “explained” and “informed” its users “in advance” of the high-risk nature of its products and “high potential for loss of principal”. However, South Korean regulators and law enforcement agencies may increase scrutiny of the digital asset class.

Crypto market still recovering from LUNA crash

The South Korean startup apparently failed to register as a virtual asset service provider (VASP). Therefore, it may incur illegal actions.

At the time of writing, there was no official statement from South Korean authorities. Uprise did confirm Sedaily’s report. A spokesperson for the platform said:

Admittedly, there has been damage to client assets due to the unexpectedly high volatility in the market. We plan to complete the virtual asset business report as soon as possible,

The company may need to compensate its customers for losses, the report said. South Korean authorities have been investigating the events that led to the collapse of LUNA. So if the startup can’t keep its customers intact, why might it suffer a bit.

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At the time of writing, BTC and the larger cryptocurrency are still trying to reclaim higher levels. Terra’s fiasco could put more pressure on the digital asset as other companies like Uprise come to light.

In the case of LUNA’s collapse, the total market capitalization of cryptocurrencies tends to decline. resource: LUNAUSDT Trading View

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