Korean startup Uprise lost $20M shorting LUNA

cointelegraph.com:

South Korean crypto investment startup platform Uprise reportedly lost around 99% of its assets worth about $20 million when it got liquidated shorting the LUNA token.

Uprise's trading desk Heybit uses an artificial intelligence (AI) trading system that was designed to reduce the risks associated with leveraged trading.

Local news outlet Seoul Economic Daily reported on July 6 that Uprise’s AI, which it calls a robo-advisor, made a disastrous misread in May on the LUNA token as it fell precipitously from $60 to fractions of a cent. The system shorted LUNA but got liquidated during the token’s bizarre price pumps along the way, leading to $20 million in customer losses and $3 million of its own losses. In total, Uprise lost about 99% of its assets.

Most users of Uprise's Heybit service are high net worth individuals and corporations who stake their crypto for yield generated by the AI trading on futures markets. The firm has been backed by the Hashed crypto investment firm, Kakao Ventures, and several banks and venture capital firms.

The firm has suspended services, but has not issued an official disclosure to its clients about the losses. An Uprise official confirmed to Seoul Economic Daily that:

In addition to officially notifying its users, Uprise officials are reportedly working on a compensation plan for its customers so that it can continue to operate.

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With Uprise in the spotlight, Seoul Economic Daily pointed out that it has not registered as a virtual asset service provider (VASP). It reported that Uprise officials feel that the firm is able to skirt the law requiring it to register as a VASP because it does not collect Korean Won nor directly invest in