Kraken’s US Perpetual Futures Can Leave Traders Owing Money After Liquidation

Most cryptocurrency perpetual futures traders assume liquidation is the worst-case scenario. The position is closed, the posted margin is lost, and the trade is over.

Kraken recently launched regulated perpetual futures for US traders, with the products cleared through NinjaTrader Clearing, operating as Kraken Derivatives US, a Commodity Futures Trading Commission (CFTC)-registered futures commission merchant (FCM). According to the clearing documentation, traders may still owe money after their positions have been liquidated.

Liquidation Doesn’t Always End the Loss

Kraken recently launched regulated perpetual futures for US traders, with the products cleared through NinjaTrader Clearing, operating as Kraken Derivatives US, a Commodity Futures Trading Commission (CFTC)-registered futures commission merchant (FCM).

While many crypto traders are familiar with offshore perpetual futures platforms where liquidation typically represents the maximum possible loss, the disclosures for Kraken’s US product make it clear that this is not always the case.

The NinjaTrader Clearing risk disclosure states that customers:

In other words, liquidation does not necessarily cap a trader’s losses.

Why a Liquidation Can Still Leave a Debt

During periods of extreme market volatility, prices can move faster than liquidation systems are able to close positions.

If the market gaps beyond the point where the trader’s posted collateral has already been exhausted, the position may ultimately be closed at an even worse price. That difference becomes a deficit.

Instead of simply losing the initial margin, the trader can end up owing additional money to cover the shortfall.

The position may be gone, but the financial obligation remains.

A Different Model From Offshore Crypto Exchanges

This distinction may surprise many cryptocurrency traders.

On many offshore perpetual futures exchanges, losses beyond posted collateral are generally absorbed through mechanisms such as insurance funds, liquidation engines or auto-deleveraging systems under normal market conditions. Retail traders therefore often view liquidation as the maximum loss they can suffer.

Kraken’s regulated US perpetual futures make no such promise.

Because the product is structured as a regulated commodity futures contract, traditional futures market rules apply, including the possibility that customers remain responsible for any account deficit following liquidation.

The disclosure states this explicitly.

A Detail Missing From Much of the Launch Coverage

Much of the reporting surrounding Kraken’s US perpetual futures focused on the regulatory milestone of bringing perpetual futures to US traders under CFTC oversight.

Far less attention has been given to the product’s own risk disclosure.

For many traders, the most important sentence isn’t in the product announcement—it’s in the clearing documentation.

The assumption that deposited collateral represents the maximum possible loss does not necessarily apply.

Understanding the Bankruptcy Price

The concept behind these potential deficits is known as the bankruptcy price.

This is the point where a leveraged position has completely exhausted the trader’s account equity. Liquidation is intended to occur before reaching this level, allowing the exchange’s liquidation engine to close the position while some collateral still remains.

However, if markets move too quickly and the liquidation order cannot be executed until after the bankruptcy price has been passed, a deficit is created.

According to Leverage.Trading, offshore exchanges typically rely on insurance funds or auto-deleveraging systems to absorb these losses. Kraken’s US perpetual futures disclosure instead states that any resulting deficit remains the responsibility of the trader.

Anton Palovaara, market structure analyst at Leverage.Trading, explained:

For traders accustomed to offshore perpetual futures, it represents an important distinction—and one worth understanding before using the newly launched regulated US product.

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