Accounts go into default if at any time the account’s leverage exceeds 30x. This corresponds to the loan value exceeding 97% of the collateral value. When this occurs, certain measures need to be taken to address the situation.
Once a loan default occurs, there is a very high risk of loan debts exceeding the account’s collateral value, resulting in an inability to repay all debts using the assets in the account. An email will be sent to you and the trading account will be locked from all actions including, but not limited to, further trading and withdrawals.
You will need to contact your Relationship Manager to unlock the account, even if the account’s leverage later comes back to a healthy level with no action on your part. Bullish exchange reserves the right to pursue additional payment from you to settle any outstanding loan amount.
It is important to note that other trading accounts remain unaffected even if one account goes into default. Withdrawals from the primary trading account will continue to be processed as usual.
Impact on Lenders
In order to mitigate losses for lenders, the Bullish exchange employs conservative risk management practices. Learn more about How does liquidation works.