Has anyone overspent by €300 on a Mastercard MultiCentre Giftcard?

Hi all this is my first post here and I would really appreciate any help you can give me. To make a long story short I received a €25.00 gift card for my birthday. I decided the other day to use the card to book a hotel, the website I used was not looking for any payment as you pay at the hotel on arrival, anyway I decided today to check the balance on the card and to my suprise the card had a balance of minus €339.00. I rang RG Financial who manage the system over here and after looking into it they told me there had been 2 hotel rooms booked (I have since cancelled one) and that they would need to get their money back and that I am also facing losing the €25.00 that was put on the card in the first place. Does this sound right or are they trying to pull the wool over my eyes. I understand that the hotel needs to be paid for and that mastercard need to recoup their money but I feel like I am being penalised for their mistake. I could have not said anything and they could have been out of pocket but I didn't I was honest from the start. And now i risk losing my hotel booking which I'm not happy about this as it was supposed to be a suprise for my friends birthday

I hope I've explained myself clearly enough and thanks in advance for any advice you can give me guys !!

did you book directly from the hotel's own website or from a booking site? you could contact the site ypu made the booking with to understand why they charged upfront instead of at check-in as they said. There may be a mistake on their part?

I booked with a booking site. I wouldn't have minded paying up front, but their was no payment upfront I double checked the confirmation email today. The part that I'm really confused with is how a €25.00 giftcard can be authorised for a €339.00 purchase. And then when I'm honest and contact them they start talking about penalising me.