- Is this assumption correct?
If the operator fails to cancel orders of someone exiting directly from the smart contract, this can be detected and proven via “Exit Insolvency Fraud proof”
- Who is running the Orderbook?
The operator
- Were any fund safety guarantees discussed regarding order cancelation?
Order creation, modification and cancels do not impact custody. Every exchange needs to be able to cancel orders for any or no reason, for example: to shutdown for maintenance, delisting an asset, etc.
Holding users canceled orders and filling them adversely is detected by the “price time priority fraud proof”.