The Insurance Fund represents the total amount of Liquidation Fees maintained by Crypto.com. It is designed to cover losses from traders where the Wallet Balance is less than 0 USD after all liquidations have occurred under Forced Liquidation. In these cases, the Insurance Fund will be used to cover these losses.

As long as the Insurance Fund is positive, winning trades can withdraw realized profits

after the next session settlement.

The Socialized Loss Mechanism will be triggered when excessive amount of losses

incurred from liquidation cannot be covered by the Insurance Fund. When the Insurance Fund is depleted, any uncovered loss will be socialized among the winning traders at the end of the trading session (that is, the Session End Time).

Under the Socialised Loss Mechanism, all winners will share the loss on a pro-rata basis to the size of their profit during the trading session.

Example

  • Let’s assume the insurance fund is down 10,000 USD

  • Traders with positive profits will share the loss on a pro-rata basis (numbers below are rounded to 2 decimal places for illustration purposes). The shared loss percentage is the percentage of a trader’s profit against the total profits of all traders.

Trader

Trader’s Profit

(USD)

Shared Loss Percentage

Shared Loss (USD)

Trader’s Net Profit (USD)

Trader A

50,000

29.24%

2,923.98

47,076.02

Trader B

45,000

26.32%

2,631.58

42,368.42

Trader C

30,000

17.54%

1,754.39

28,245.61

Trader F

30,000

17.54%

1,754.39

28,245.61

Trader G

15,000

8.77%

877.19

14,122.81

Trader E

1,000

0.58%

58.48

941.52

Total

171,000

100%

10.000

161,000

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