When a trader is liquidated on a crypto futures trade, any remaining margin in their account is used to cover their losses. If the losses exceed the available margin, the trader may be responsible for paying the difference.
The exchange or broker may charge a fee for the liquidation service, and this fee may be deducted from the remaining margin or added to the trader's debt if there is a shortfall.
It's also worth noting that in some cases, the exchange or broker may have an insurance fund or socialized loss mechanism to cover the losses of liquidated positions. In this case, all traders on the platform may be required to contribute a portion of their profits or margin to cover the losses.
In summary, when a trader is liquidated on a crypto futures trade, the money is used to cover their losses, and any remaining funds may be returned to the trader after fees and expenses are deducted. However, if the losses exceed the available margin, the trader may be responsible for paying the difference.
