After a user made an “enormous” gamble on bitcoin futures, and lost, Hong Kong-based cryptocurrency exchange OKEx said it is having to claw back millions from counterparties.

The exchange explained on Friday that it force-liquidated an “unusually large” long position of 4,168,515 bitcoin futures contracts held by a client on July 31 after the user declined the exchange’s request to lower the position.

Each futures contract has a notional value of $100, according to OKEx, so the total value of the position was over $400 million.

The platform said it subsequently froze the user’s account and initiated a forced liquidation.

An OKEx spokesperson told CoinDesk that, even with the force liquidation, the dropping price of bitcoin and the “sheer size of the order” mean it has had to trigger its societal loss risk management mechanism.

After its insurance cover is taken into account, the loss to investors is around 1,200 BTC (around $8,800,000 at press time), which will “split proportionately by all profited traders’ realized + unrealized gains,” the spokesperson said.

OKEx said it had also injected 2,500 bitcoins into its insurance fund – worth around $18 million at press time – to limit the damage to traders.

A societal clawback happens when the platform’s insurance fund is not able to cover investors’ total margin call losses. In that case, counterpart investors – i.e. those who have short positions – will have to make up the shortfall.

“When the insurance fund cannot cover the total margin call losses, a full account clawback occurs. In such case, only users who have a net profit across all three contracts for the week will be subject to the clawback,” the exchange explained on Friday.

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