The short answer is: Yes, they will be swept, and once swept, they may not come back.
This is not the platform secretly taking your money. It is how the settlement mechanism works when off-exchange custody assets are used as margin. Your custody assets may not sit in the exchange's hot wallet, but in the risk engine's view, they are already "locked."
How Off-Exchange Custody Margin Works — in One Sentence
The core idea of off-exchange settlement (OES) is: your assets are held in a custody address under your name (for example, with custodians like Cactus Custody or Standard Chartered), and the exchange only gets a "record" — but it has the right to sweep those assets for liquidation during the settlement cycle.
Take the OKX and Standard Chartered model as an example. You place assets like BUIDL with Standard Chartered, and OKX treats them as collateral with the same value as USDT. It calculates your margin and liquidation line in real time. But at the bottom layer, ownership and yield rights still belong to you — the assets are simply held by the bank.
Assets being "held by a bank" does not mean "the exchange cannot use them." Whether liquidation is triggered depends on the exchange's risk engine calculation, not on where the funds are stored.
How Funds Are Swept During Liquidation — What Happens in the Settlement Cycle
The Cactus Oasis process helps explain this. It is designed to run a settlement cycle every 4 hours — the exchange sends the previous cycle's client settlement data, and the custodian executes fund transfers based on that data.
During liquidation, the flow looks like this:
- The exchange triggers forced liquidation: the account's UniMMR (unified maintenance margin rate) falls below the threshold (for example, Binance uses 1.05, or 105%).
- Your custody assets are "claimed": the exchange sends a liquidation request to the custodian. Under the agreement, the custodian sweeps the corresponding assets from your custody balance to cover the loss.
- Settlement is completed: the swept assets go to the exchange's or custodian's liquidation pool, and your position is closed.
The amount swept is the amount the system calculates that you still owe.
Where Swept Assets Go — Risk Reserves and Liquidation Costs
This part of the funds is not directly taken by the platform. On OKX, for example, liquidation surplus is injected into the platform's "Security Fund," which is specifically used to cover excess losses from "bankrupt positions." This fund is a separate asset pool and does not belong to the platform's own funds.
Binance's rules are more specific: if your account equity is negative after forced liquidation, the system uses the "leverage insurance fund" to repay your debt. If the debt is equal to or less than 0.1 BTC in value, the fund automatically repays it. If it is larger, manual review is needed.
The swept portion is used to cover the "hole" in the account. If the closing price is better than the bankruptcy price, the leftover amount actually flows back into the risk fund — it does not go directly into the platform's pocket.
How to Verify After the Process
If you use off-exchange custody mode, check the custodian platform's [Settlement Records] or [Liquidation Details] after trading. After each 4-hour settlement cycle ends, there will be a clear transfer record — if you see a field like "liquidation transfer" or "Settlement Transfer," the process has been completed. Also check the exchange's [Liquidation History] to confirm whether the liquidation was triggered because your account's UniMMR fell below the threshold.
