Can a Trader Be Held Liable for Losses beyond Their Margin? ⎊ Path

Can a Trader Be Held Liable for Losses beyond Their Margin?

In the vast majority of cryptocurrency futures exchanges, traders are generally not held liable for losses that exceed their margin (negative equity) due to the use of an insurance fund and auto-deleveraging. This is known as a "zeroing out" policy.

However, in some traditional or highly regulated jurisdictions, a broker may pursue a trader for a negative balance.

What Is the Legal Status of a DAO in Major Jurisdictions?

How Do Capital Requirements for Crypto Exchanges Differ between Major Regulatory Jurisdictions?

How Does the Enforceability of Netting Vary across International Jurisdictions?

What Is the Difference between a CCP’S Guarantee and an Insurance Company’s Policy?

How Does a Client Verify That Their Specific Assets Are Covered under a Blanket Policy?

Can a CEX Be Held Liable for a Front-Running Incident If It Was Unaware of the Employee’s Actions?

How Do Different Oracle Networks Vary in Their Crypto-Economic Models?

Can a Trader Be Legally Pursued beyond Their Posted Margin for a Default?

Glossar

Losses

Impairment ⎊ Losses in cryptocurrency, options, and derivatives trading represent a reduction in the recorded carrying value of an asset due to declines in market prices or counterparty creditworthiness.