The pGALA Arbitrage: How One Ticker Became Two Tokens and Paid $6.5 Million

On the night of November 3, 2022, GALA briefly existed at three very different prices at once. On Binance and most exchanges it traded above $0.029. On Huobi it fell to $0.0003. On PancakeSwap, its wrapped twin pGALA went to $0.0000045. Between those prices sat one of the cleanest — and most controversial — arbitrage trades in recent crypto history: one wallet turned about $120,000 into roughly $6.5 million in a few hours.

This is how it worked, minute by minute, who made money, who was left holding the bag, and what it teaches anyone who trades spreads between exchanges.

Background: GALA and pGALA

GALA is an Ethereum token. To make it usable on BNB Chain, the cross-chain bridge pNetwork locked GALA on Ethereum and issued a wrapped version, pGALA, on BNB Chain — one pGALA for each locked GALA. Some exchanges listed BNB Chain as a deposit network for GALA, so a deposit of pGALA was credited to users as ordinary GALA on the exchange.

That arrangement is safe only while every pGALA is backed by a real GALA. On November 3 it stopped being backed.

What broke

According to SlowMist, the private key controlling the pGALA contract's admin had been published in plain text on GitHub, and the admin owner had been replaced on August 28, 2022 — 70 days before anything happened. Whoever held that role could upgrade the contract and mint unlimited pGALA.

pNetwork noticed on November 3 and, by its own account, decided to strike first: it minted a huge amount of uncollateralized pGALA itself and sold it into the PancakeSwap pool, draining the liquidity before a hostile party could. It called this a "white hat" operation. Huobi later called it malicious.

Timeline (UTC)

Times are from pNetwork's post-mortem, Binance's announcement and a CoinStats timeline reported in Beijing time and converted to UTC.

The key number in this table is the gap between the two bold lines. Binance closed the BNB Chain door two minutes after being asked. Huobi's door stayed open for more than three hours after pGALA started collapsing. pNetwork said it had asked exchanges to suspend deposits but that suspensions were not uniform; Huobi said the warning never reached it in time, according to crypto.news.

Three prices for one ticker

Prices from CryptoSlate, Hashdex and CoinStats.

The trade, step by step

The arbitrage was not between two prices of GALA. It was between a worthless token and a valuable ticker.

1. Buy pGALA on PancakeSwap for almost nothing after the pool was drained.
2. Deposit it to Huobi on the BNB Chain network. Huobi still credited BNB Chain deposits as GALA.
3. Sell it on Huobi's GALA/USDT order book, where buyers were still bidding for what they thought was the real token.
4. Withdraw USDT — or move the proceeds anywhere outside the problem.

The best-documented wallet, tracked by Lookonchain, spent about $120,000 on pGALA and sold it for about $5.79 million on Huobi — 385.8 million tokens at around $0.015 — and about $675,000 on Binance, 21.1 million tokens at around $0.032. In total about $6.5 million came out for about $120,000 put in, according to CryptoSlate and CoinStats.

It was not the only one. In 24 hours Huobi traded 25.65 billion GALA, worth $134.5 million, at an average price of $0.005 — a volume that only makes sense if a flood of pGALA was being deposited and sold. With every sale the Huobi price fell further, from $0.04 to $0.0003, until it had almost no relationship to GALA anywhere else.

The trade that looked like arbitrage — and wasn't

There was a second, more obvious trade on the screen that night: GALA at fractions of a cent on Huobi, GALA at $0.03 on Binance. Buy cheap on Huobi, sell or short expensive elsewhere. That is exactly what a cross-exchange arbitrage scanner would show, and some traders and market makers took it.

They were buying pGALA without knowing it. On November 4 Huobi split balances at the moment of the incident: GALA bought after it was renamed PGALA, a separate token that Huobi described as unrelated to the original GALA, according to its follow-up notice. Deposits of PGALA were closed; it could only be traded or withdrawn. Huobi later added a 1.2% fee on every PGALA trade to buy back and burn the token. Market makers who had bought "cheap GALA" were left with what CoinDesk described traders calling a meme token, while any short they had opened against real GALA on another exchange was still open.

The spread was real. The asset was not the same.

Who paid

• pNetwork recovered 12,977 BNB from the pool and proposed to distribute it to pGALA holders based on two snapshots, at 19:45 UTC on November 3 and 08:00 UTC on November 7.
• Binance supported the plan, airdropping BNB to users who had deposited pGALA after its 19:49 suspension, at 0.00000109 BNB per pGALA, per its announcement. Holders of ordinary GALA on Binance were never affected.
• Huobi accused pNetwork of earning about $4.5 million from the event, offered a $1 million bounty for the return of funds and threatened legal action, according to Cointelegraph.
• In April 2023, Huobi and Gala Games agreed to pay $50 million to affected users — $25 million from each — and Gala sued pNetwork for $27.7 million, with Huobi joining the suit, according to CoinDesk.

What the pGALA trade teaches arbitrage traders

1. A ticker is not an asset. The same name on two exchanges can hide two different contracts. Before trusting a spread, check which contract each exchange accepts on deposit — ArbiLayer's scanner marks opportunities where deposit contracts do not match on the two venues.
2. The deposit network is part of the price. The profitable path ran through one specific network on one specific exchange. Check which networks are open on both sides of a trade, not only whether deposits are "open".
3. Suspensions are a race. Binance closed in two minutes, Huobi in more than three hours. Spreads created by a broken token live exactly as long as the slowest exchange keeps its door open.
4. The cheapest venue can rewrite your balance. Huobi re-labelled purchases after the fact. A position bought on the most broken venue carries counterparty risk that no price chart shows.
5. A 99% discount is information. When one exchange quotes a token at a fraction of every other venue, the first question is not "how much can I buy?" but "what am I actually buying?"
6. Wrapped tokens inherit every key behind them. pGALA's backing depended on one admin key. A leaked key turned a bridge token into an unlimited mint months before anyone noticed.

You can follow GALA's price on every exchange on its coin page and its funding on the GALA funding page.

This article is for information only and is not investment advice.