Crypto exchange Gate charged a stock dividend to the wrong contract, resulting in widespread liquidations and pushing at least one account $1.5 million in the red despite the asset's price remaining virtually unchanged.
Gate later stated that the issue stemmed from two assets sharing the same name. According to the exchange, approximately 200 accounts were affected, and the platform has committed to absorbing the full losses.
How the Dividend Error Occurred
On Monday, Gate announced that a $0.33 per-share dividend from US asset manager Franklin Resources would be passed through a perpetual futures contract named BENUSDT at 08:00 UTC on Wednesday. Under the exchange's rules for perpetual futures, traders betting on a price rise receive the payment, while those betting on a fall pay it.
However, screenshots shared by traders showed BENUSDT trading near $0.000585, reflecting the price of a low-value cryptocurrency token with the same ticker rather than a traditional stock price. Applying a $0.33 charge to this contract amounted to roughly 564 times the asset's actual price.
Liquidations and Negative Balances
Leveraged traders rely on a cash deposit, or margin, to cover potential losses. When that deposit is exhausted, the exchange automatically force-closes the position in a liquidation.
The unexpected dividend charge drained the required margin immediately. Gate's prior notice had warned short sellers that the payment could trigger liquidations if balances were insufficient. Because some accounts shared a single margin pool across multiple bets, other positions were closed as well. A screenshot posted on X by user @SmallPig0526 showed an account balance sitting at negative $1.46 million.
Conversely, long traders experienced outsized credits to their balances, though it remains unconfirmed whether any of those funds were withdrawn.
Gate Response and Resolution
Godot, who leads Gate's creator community program, stated that the platform identified and resolved the issue within minutes. He noted that balances were being restored and that Gate would cover the total 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," Godot wrote in a post.
Gate has not yet published a detailed incident report or clarified how it intends to handle the credits distributed to long traders. The incident occurred as the exchange expands its offerings into stock products, following the addition of Japanese stock trading in August.
