The "pin" storm of LA contract: Gate.io's data source is abnormal, but users who lose their positions can only bear the losses?

Author: momo, ChainCatcher

Recently, Gate.io has been in trouble due to abnormal "pin" in the $LA/USDT contract. Several users accused Gate.io of suspected manipulation during the contract price fluctuations, resulting in many users' positions being abnormally liquidated or even penetrated, resulting in heavy losses.

Although Gate.io has responded to the cause of the accident and compensation plan, community users do not seem to buy it. C hain C atcher seeks further responses from Gate.io regarding user questions , but for the key causes of the accident and compensation plans, Gate.io 's reply is basically consistent with the announcement, and no new details have been added yet.

Why is Gate.io 's response not bought by users?

At 8 pm on June 4 ( UTC+8 ) , Gate.io launched the $LA/USDT perpetual contract . About 4 minutes after opening , the $LA price soared from around 0.3 6 USDT to 27 USDT within a few seconds , and then fell to around 0.2 USDT . During this period, the spot price and on-chain price of LA on other exchanges with the same currency are mostly around 1 USDT .

This " pin " phenomenon that deviates from normal fluctuations has led to a large number of users losing their positions in a short period of time, and some accounts even break their positions . Encryption KOL @Elizabethofyou said that the loss reached USDT in the event , while @BTC_Alert_ said that the loss was USDT of 100,000 and owed the platform 120,000 USDT , and the increase and closing operations were not allowed during the period.

Gate.io then removed the contract and announced at around 9:28 that night that it would compensate the part of the warehouse.

@BTC_Alert_ , @Elizabethofyou and other users reported that after Gate.io released compensation for the position cut, the transaction delivery order was tampered with. @Elizabethofyou said that there are 3 transaction orders with a total transaction volume of USDT , 7999USDT , and 13990USDT , respectively , which have been changed to USDT, 79.94 USDT , 79.99USDT , and 139.34USDT respectively .

Some damaged users therefore questioned the Gate.io platform suspected of " malicious trading " or the platform's risk control problems .

On June 5 , Gate.io CBO Kevin Lee further responded to the contract trading abnormality, saying that the cause of the incident was an abnormality in the contract index source data and the superposition effect of the risk control automatic mechanism. There was no internal operation, nor was there a "single-point liquidation" or intentional blasting users. Gate.io also denied that the platform tampers with user transaction data.

In terms of compensation plans, Gate.io still only compensates all the parts that are penetrated. The amount of the penetration compensation plus the profits that all users have obtained are allowed to retain the total compensation finance that Gate.io bears is approximately US$ 30 million.

But many users don't buy it. First, I believe that the compensation plan is unreasonable. Users believe that whether it is a liquidation or a liquidation, it is caused by the price deviation from normal fluctuations due to problems in the platform. Why only the liquidation part is compensated instead of the loss of the liquidation user?

Second, it is believed that the cause of the accident is not convincing to the abnormal data source. Some users suggest that the platform should disclose the index source composition and exception logs to prove that there is no internal manipulation.

In addition, for the entire Gate.io incident, affected users expressed dissatisfaction with the platform's feedback and response speed and attitude. For example, why do we respond to AMA and only open English AMA ?

Under platform loopholes, what is the basis for G ate.io

to not pay compensation for liquidation?

In response to users ' concerns about Gate.io 's response, C hain C atcher sought further responses from Gate.io , eliminating some duplicate content from the announcement . The key replies of G ate.io are as follows:

1. C hain C atcher : Gate.io lacks explanation for the specific situation of exponential source exceptions, such as which data source is the problem? Why did the platform risk control fail to detect abnormalities in advance? Is market manipulation involved? Can further evidence be provided and detailed explanations?

G ate .io provides no further evidence or explanation. (Because the reply and the announcement are basically the same, no specific presentation will be made)

2. C hain C atcher : Due to abnormal Gate.io data source, user transactions are abnormal. Why only pay for the penetration of the position but not the liquidated part? What is the basis?

G ate .io : After technical inquiry, all LAUSDT contract transactions are strictly implemented in accordance with the predetermined trading rules. The matchmaking and liquidation mechanisms are triggered normally based on the index price rules. No system abnormalities are found. Therefore, the losses caused by liquidation are not within the platform's compensation range.

In addition, the loss of crossing positions is usually borne by the user, and other platforms in the industry also follow similar rules. However, this time the compensation for the position is an additional subsidy that the platform actively bears, and is a reflection of its responsibility for the systematic liquidation results caused by extreme market conditions.

3. C hain C atcher : Judging from the feedback from the X platform, many Chinese users have suffered a lot of losses due to the abnormality of the $LA/USDT contract. Why does Gate only choose to respond in English AMA ? And why did the user's request to go up to the tweet and set the reply limit for this tweet? Are you considering making another Chinese AMA response?

G ate .io : This AMA will be held within 24 hours of the incident . The primary goal is to quickly respond to market concerns and convey the platform's position in a timely manner. Given that Gate users are widely distributed around the world, we prioritize the arrangement of English AMA to ensure that information can reach most affected users at the first time. We also attach great importance to the voices and demands of Chinese users, and have simultaneously strengthened communication with Chinese users through multiple channels such as on-site information, community and customer service.

If the community or users have further needs, we are willing to arrange an AMA specifically for Chinese users in the near future to provide more direct and open communication opportunities.

Our decision to not open the microphone and reply permissions is mainly based on the balance of maintaining the pace of discussion and avoiding escalating disputes, and we have no intention of avoiding communication. We will optimize the questioning mechanism in subsequent arrangements to achieve more complete interaction and response.

4. C hain C atcher : @Elizabethofyou , @BTC_Alert_Multiple users reported that the order was tampered with. You responded that there was no tampering and the user did not accept it. During this period, did you have further verification and detailed explanation for the user's order abnormal feedback?

G ate .io : We attach great importance to the abnormal feedback from individual users in the community on order records. The technical team conducted inspections one by one as soon as possible. At present, no orders have been tampered with by humans. The price jump shown in screenshots of some users is actually a normal result of the amplification of the difference between the transaction price and the mark price in extreme market conditions.

We welcome users to provide more detailed original records (such as order ID , transaction screenshots, etc.), and we will continue to cooperate with the investigation and provide targeted feedback to each user who raises doubts.

5. C hain C atcher : Users affected by the $LA/USDT contract event still have questions about Gate compensation and responses. Do you have new responses and compensation plans?

G ate .io : There is currently no new unified compensation plan. If there are other questions or special circumstances outside the existing mechanism, we welcome users to continue submitting information.

The Crisis of Trust After Frequent CEX Contract Accidents

Contracts are CEX 's core profit-making business. However, from the Bitget VOXEL contract storm to the controversy caused by the abnormal Gate.io LA contract , it reflects the technical and risk control challenges faced by CEX in high-leverage and high-risk contract trading. CEX has problems such as lack of transparency and insufficient user rights guarantee in crisis handling , which further leads to a crisis of trust for users .

In a fiercely competitive market , CEX may only be able to rebuild user trust by responding more actively to user demands and filling in various shortcomings such as risk control.