Is a Trader Liable for the Deficit If the Insurance Fund Is Also Depleted?
In most modern crypto futures exchanges, traders are generally not held liable for deficits beyond their margin balance, even if the insurance fund is depleted. This is due to a 'zero-sum' or 'limited liability' model, where the maximum loss is capped at the margin deposited.
If the fund is depleted, the deficit is typically covered by the final mechanism, Auto-Deleveraging (ADL), which reduces profitable traders' positions instead of pursuing the bankrupt trader for the debt.
