Crypto Startup Uprise Lost 99% of Client Funds While Shorting LUNA During Its Price Crash

Korean crypto startup Uprise lost virtually all of its client funds by shorting luna (LUNA) during its price crash and getting caught on the bounces, Seoul Economic daily reported on Wednesday. From a report: The Korean firm billed itself as using artificial intelligence (AI)-enabled automatic trading strategies to trade crypto on behalf of its clients. This trading desk is one-half of the company's service called Heybit while the other half is a global exchange-traded funds platform called Iruda. Under Heybit, Uprise took custodied crypto assets from customers and traded them in the cryptocurrency futures market. Uprise's AI-enabled trading technology was supposed to minimize the risk associated with leveraged crypto trading. However, the system could not prevent the firm from being liquidated out of its LUNA futures trading position and losing 26.7 billion won ($20 million) in the process. This happened during Luna's price crash. It was reportedly shorting Luna -- while its price plummeted -- but got caught out during sudden price pumps along the way. The lost funds represent about 99% of the funds that Uprise was managing on behalf of its customers. These clients are high-net-worth individuals and corporate entities, according to the report. Uprise also reportedly lost $3 million of its own funds short trading LUNA.

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