What happens when you have 3 ship in combat with each other and...

-Ship A successfully uses "Gain The Advantage" on Ship B.

-Then Ship B successfully uses "Gain The Advantage" on Ship C.

-Then Ship C successfully uses "Gain The Advantage" on Ship A.

Is that possible? or did some rules get broken?

Very possible. All three are flying in a circle. A is in behind B and has a clear shot. B is behind C and has a clear shot. C wraps around and has a clear shot on A.