As reported by Seoul Economic Daily, Uprise’s AI made a fatal mistake when it placed short bets on LUNC, anticipating the token to go even lower as it fell from $60 to fractions of a cent in May. However, several bizarre pumps occurred along the way, leading to $20m in customers’ losses and $3m in the company’s own losses.
What makes the situation even more dire is that Uprise advertised its AI advisor as an automated trading service with low operational risk. Most of the platform’s clientele are high-net-worth individuals and institutions who authorized Uprise to manage their crypto holdings for them. The company has already announced it’s considering some form of compensation for the affected customers.
“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 [the] virtual asset business soon,” Seoul Economic Daily cited the company’s spokesperson.
Uprise was backed by the Korean VC giant Kakao Ventures and major Korean commercial lender Hana Bank. The company raised over $18m in a Series C funding round in December 2021.
The ongoing bear market has already wiped 25 crypto exchanges in 30 days. According to the CoinMarketCap data, the current number of exchanges stands at 500, while on June 6, this figure stood at 525. The Terra meltdown sent shockwaves across the crypto market, triggering severe financial problems for hedge funds and lenders, including Voyager Digital, Three Arrows Capital, and Celsius.