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Breaking News: Coinbase Confirms DOJ Investigation Following Major Security Incident

How This Company Lost 99% Of Its Clients Funds Shorting LUNA

Reynaldo Marquez
Reynaldo Marquez
2 years ago
2 mins read
Crypto LUNA LUNAUSDT Terra

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Per a report from Sedaily, the trading arm of Korean startup Uprise has lost of all its clients’ funds. The platform was used by wealthy individuals and institutions to trade crypto futures contracts via an artificial intelligence (AI) tool.

Related Reading | Altcoins Take The Lead As Bitcoin Struggles To Hold Above $20,000

According to the report, Uprise advertised its AI trading tool as high operational stability and a high-risk management alternative. In addition to losing its clients’ funds, the company was reported to record a loss of around $30 million from its own capital.

Uprise operates an AI trading platform and a crypto exchange platform. 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.

The local news media claims the platform is yet to inform its clients about the alleged massive loss. The report claims the trading AI placed several short positions on the failed cryptocurrency LUNA and was negatively impacted by the market volatility.

LUNA was Terra’s former native token which operated with a burning/issuance mechanism linked to the failed algorithmic stablecoin UST. Via the Anchor Protocol, Terra users were able to receive a 20% APR on their UST deposits.

Both UST and LUNA collapsed losing over 99% of their value in less than two weeks. Uprise is not the only firm negatively impacted by the collapse of the Terra ecosystem.

The fallout forced crypto hedge fund manager Three Arrows Capital (3AC), crypto lending company Celsius, BlockFi, and others to liquidate their LUNA positions recording millions of dollars in losses. As a consequence, the crypto market has experienced a steeper downside.

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. However, South Korean regulators and law enforcement agencies could increase their scrutiny of the digital asset class.

Crypto Markets Still Recovers From LUNA Collapse

The South Korean startup apparently failed to register as a Virtual Asset Service Provider (VASP). Thus, it might have incurred an illegal action.

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

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 virtual asset business soon,

The report claims the company might need to compensate its customers due to their losses. South Korean authorities have been investigating the events that led to the LUNA collapse. Thus, why the startup could take some heat if it is unable to make its clients whole.

Related Reading | Bitcoin Approaches 2018 Like Drawdown, Why $20,000 Is A Crucial Level

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

Crypto LUNA LUNAUSDT
Crypto total market cap trends to the downside amid LUNA’s collapse. Source: LUNAUSDT Tradingview
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Reynaldo Marquez
Reynaldo Marquez

Reynaldo Marquez

A literature major, Reynaldo Márquez has been deeply immersed in the crypto industry since 2017. His journey began with translating articles for various crypto news outlets, a role he took on with zeal. In 2018, amidst a challenging market, he embraced his first writing assignment, demonstrating his unwavering commitment to the nascent industry and the promise of change it bears for many people worldwide.
In March 2021, he joined the prestigious crypto news outlet NewsBTC and Bitcoinist, where he not only reported on the latest crypto news but also had the privilege of interviewing some of the industry's most influential figures. A year later, his dedication and hard work were recognized, and he was promoted to Managing Editor, a position he currently holds with pride.
He believes in honesty, good communication, hard work, and the power of cryptocurrency and its potential to transform people's lives, especially those alienated by the legacy financial system. Born in 1992 in Venezuela, Reynaldo is familiar with how governments and central banks can negatively affect people, their everyday lives, and their futures by creating inflation and erasing their hopes for a better future. Thus, like many Venezuelans, he embraced this new technology to help him and his family navigate difficult times.
In another life, Reynaldo would have pursued a career as an investigator, most likely tracking down the origins of the Cyberpunk movement with the publication of William Gibson’s ‘Neuromancer.’ The intersection between fiction and reality, with the materialization of Bitcoin in 2009, would have allowed him to dive deep into the crypto sphere as something more than a financial phenomenon but also a cultural shift in society that was brewing since the XX century, and maybe even sooner, in the XIX century with the publication of Henry David Thoreau’s ‘Civil Disobedience.’
But that’s for another life. In this one, Reynaldo has been trading to improve his trading skills. Since 2023, he has been trying to learn Python to create successful strategies and find ways to execute them. It is a difficult task, which continues to keep him busy today and will most likely continue to keep him busy in the near and long term.
In his free time, he enjoys lifting heavy objects, reading, watching movies, and listening to his favorite music. Some of his favorite authors are Walt Whitman, William Faulkner, Allen Ginsberg, James Baldwin, Raymond Carver, Ray Bradbury, George Orwell, Mario Vargas Llosa, Reinaldo Arenas, Rafael Cadenas, and many others. Lately, he has been primarily interested in reading about dystopic societies, a topic that deeply resonates with the crypto industry.
Since 2023, he has lived in Spain with his wife. He loves the weather, the food, and the people and their culture. They both expect to travel much more within the country they now call home and beyond its border. He hopes to retire with his wife, maybe in a quiet place near a beach, but most likely in a city close to a library and a university with his kids and, hopefully, grandkids.

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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Reason to trust

Strict editorial policy that focuses on accuracy, relevance, and impartiality
Created by industry experts and meticulously reviewed
The highest standards in reporting and publishing
How Our News is Made

Strict editorial policy that focuses on accuracy, relevance, and impartiality

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Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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