Can a Depleted Insurance Fund Lead to a Loss of Collateral for Non-Bankrupt Traders?

Yes, a fully depleted insurance fund can lead to a loss of collateral for non-bankrupt traders, specifically if the exchange is forced to implement a socialized loss system. In this scenario, the remaining deficit is covered by deducting a proportional amount from the unrealized profits or, in the worst case, the collateral of all profitable traders.

This is why ADL is preferred, as it is a targeted closure, not a system-wide deduction.