Gate Exchange Trading Error Left One Account $1.5 Million in the Red

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.