The Dramatic Downfall of Uprise
Uprise, a South Korean startup specializing in crypto investments, recently faced a cataclysmic meltdown that saw it lose nearly all of its assets—around 99%—valued at a staggering $20 million. Yes, you read that correctly; they got sent to the crypto graveyard after shorting Luna Classic (LUNC). Talk about a disastrous investment strategy gone wrong!
How AI Went Awry
The company employed an AI-driven trading system, known as Heybit, aimed at mitigating risks associated with leveraging. One could almost hear the investors chuckle at the thought of relying on a ‘robo-advisor.’ However, as reported by Seoul Economic Daily, when the market turned unexpectedly turbulent in May, this AI seemed to have misread the entire situation. Instead of safeguarding assets, it inadvertently threw them into the lion’s den, shorting LUNC just before it took a nosedive from an impressive $60 to a mere whimper, hovering at fractions of a cent.
The Cost of Liquidation
During this roller-coaster ride, the AI not only shorted LUNC but was also liquidated during one of its bizarre price rebounds. Users of Uprise, most of whom are high-net-worth individuals and firms staking their crypto for yield, ended up footing the bill for a pitiful loss of $20 million. On top of that, Uprise itself felt the pain, racking up an additional $3 million in losses. The reality for Uprise is much like a bad breakup; they went from ‘I love you’ to ‘what was I thinking?’
Silence from the Company
Despite the chaos, Uprise has put the brakes on its services without officially notifying clients about the losses. An official statement from Uprise confirmed the damage, citing “unexpected volatility in the market.” It appears that their crisis management team was taking a long coffee break when that message was drafted. Plans for a compensation strategy are reportedly in the pipeline, as the firm struggles to keep its doors open.
In the Eye of Legal Scrutiny
While they scramble to regroup, it’s worth noting that Uprise has not registered as a Virtual Asset Service Provider (VASP). This is raising eyebrows, as operating without proper registration can actually lead to a world of legal troubles. Uprise claims it avoids registration since it doesn’t collect Korean Won or invest directly in digital assets, focusing solely on futures. But let’s be real: skirt the rules all you want, but it doesn’t exactly scream ‘trustworthy’!
Joining the Ranks of Fallen Titans
Uprise isn’t alone in its misery. It has joined a growing list of centralized crypto service providers facing existential threats due to the Terra incident, with BlockFi, Celsius, and Voyager Digital also feeling the financial squeeze. In the wild west of cryptocurrency, it seems many are learning the hard way that what goes up must come down, and it can happen faster than your dog can eat a whole pizza.
