South Korean crypto investment company Uprise plans to compensate investors for damages incurred during its futures bet on Luna Classic (LUNC) – a token that was built on the ruins of the failed Terra ecosystem.
Uprise is making arrangements to compensate 40% of the loss incurred by customers tied to its disastrous short bet on the token, according to the Korean newspaper Soul Economic Daily. The short position was placed in May using client funds that were deposited in a $20.3 million (26.7 billion won) discretionary investment vehicle. As reported by Cointelegraph, Uprise lost 99% of its assets on the trade when it got liquidated.
“After obtaining the consent of the existing shareholders, the compensation process will be implemented,” reads a translated version of the Soul Economic Daily report. Most of Uprise’s clients are high-net-worth individuals and corporations.
Uh Oh #Crypto Bro: #ItsHappening Again#Korean Startup #Uprise’s AI Robo Trader Lost $20M Shorting #LUNC, a #CryptoCurrency that Imploded from $60 to Fractions of a Cent#cryptocurrencies #cryptocrash $LUNC#Blockchain #Bitcoin #BTC #ETH #Ethereum #LUNAhttps://t.co/tjYiGRTGCW pic.twitter.com/l7NxAwg08C
– PSYC Craig ☠️ (@psychedelicraig) July 7, 2022
The compensation plan involves issuing Uprise stock to investors based on the company’s valuation following its Series C funding round last year. That puts Uprise at a valuation of roughly $213.2 million (280 billion won). “The issuance of new shares is expected to be around 3% of the stake,” the report said. Uprise will increase the number of shares through a stock split.
Uprise said it is moving ahead with its compensation plan despite not being legally obligated to do so. “Although the company has no legal obligation to compensate, it is a measure to continue growing the business while restoring trust through amicable agreements with customers,” the report clarified.
The value of LUNC has been prone to extreme fluctuations since the relaunch of Terra 2.0 in late May. The token is currently valued at 0.0000997, according to CoinMarketCap.