4x leverage turns 25% drawdown into total wipeout; prime brokers seize portfolios and fire-sell to multi-strats
At 4x gross leverage, a 25% GMV decline eliminates equity; prime brokers (Goldman, BofA) then take control and auction the book to Citadel/Millennium/Jane Street at 20-50% discounts, creating a self-reinforcing spiral where predatory shorts front-run the liquidation.