Crypto exchange Gate charged a stock dividend to the wrong contract on Wednesday. Traders betting against it were wiped out, even though its price barely moved.
Gate blamed two assets sharing one name. It said about 200 accounts were affected and that it will pay the losses.
How the Gate Dividend Error Happened
On Monday, Gate posted an announcement about Franklin Resources, the US asset manager behind Franklin Templeton. It said the company’s $0.33 per-share dividend would be passed through a contract called BENUSDT at 08:00 UTC on Wednesday.
BENUSDT is a perpetual futures contract, a bet on an asset’s price that never expires. Under Gate’s rules, traders betting on a rise, called longs, would receive the payment. Traders betting on a fall, called shorts, would pay it.
However, screenshots shared by traders showed BENUSDT trading near $0.000585, not at a stock price. That is the price of a low-value crypto token with the same ticker.
A $0.33 charge against it is roughly 564 times the contract’s price.
Why Shorts Lost Money With No Price Move
Leveraged traders post a cash deposit, called margin, to cover losses. When that deposit runs out, the exchange force-closes the position. This is a liquidation.
The dividend charge alone drained that margin. Gate’s notice had warned shorts that the payment could trigger liquidation if balances ran low.
Some accounts shared one margin pool across several bets, so other positions closed too. One screenshot posted on X (Twitter) by user @SmallPig0526 showed an account at negative $1.46 million.
Longs saw the reverse, with outsized credits appearing in their balances. It has not been confirmed whether any of that money was withdrawn.
Gate Says Users Will Not Bear the Loss
Godot, who leads Gate’s creator community program, said the platform found and fixed the problem within minutes. He added that balances were being restored and Gate would absorb the full loss.
“Today at 16:00 UTC+8, while processing the BEN contract funding rate in accordance with the announcement made two days ago, we encountered an error due to duplicate names, affecting a total of 200 accounts…The resulting user balance display issues are being resolved progressively. All users have incurred no losses whatsoever, with Gate bearing the full responsibility,” wrote Godot in a post.
Gate has not published a detailed incident report. The error comes as the exchange pushes into stock products, including Japanese stock trading added in August.
Rivals are moving the same way. The NYSE recently signed a deal to bring tokenized US stocks to crypto users.
Gate has not said how it will handle the credits paid to longs.