Space prediction market refunds $7.3 million! Emergency measures after oversubscription controversy

Space public sale raises over $20 million, refunds $7.3 million in excess funds. Community questions whether the team’s predecessor was UFO Gaming (token down 99%), accusing that prioritizing the development of perpetual contracts before releasing a test version raises suspicions of cashing out. Some refund addresses are new addresses. Space emphasizes that funds are used for leverage pools and CEX listing.

Space public sale oversubscription of $20 million sparks community doubts

(Source: Space)

On January 22, the leverage prediction market Space issued a new official statement regarding recent token distribution, fundraising scale, and refunds after the public sale. The official revealed that this round of public sale attracted over $20 million, and ultimately, 19.6% of tokens were allocated from the community pool, which accounts for 51% of the token economy, corresponding to an FDV of approximately $69 million. To ensure fair distribution, the plan is to refund over $7.3 million in excess funds, and explained that some refund address changes were made for security reasons by participants.

Regarding the controversy over the fundraising amount, Space clarified that the previously mentioned $2.5 million was only a soft cap, not a hard cap. The expansion of the fundraising scale aims to support liquidity in the leverage market and years of R&D, ensuring the project’s long-term competitiveness. Space emphasizes that the $2.5 million target is a soft cap, not a hard cap. This approach is common in some startup incubators, where the soft cap is called a target. This structure is effective because it allows projects to responsibly scale according to actual needs rather than falling into a funding shortfall.

The soft cap is just a baseline, ensuring the absolute minimum funds needed for safe operation. However, accepting only $2.5 million would only sustain a few months of operations and cannot support the multi-year development cycle needed to build large-scale leverage prediction market infrastructure. The tokens for this public sale come from the community fund pool, which accounts for 51% of the token economy. Based on demand received, 19.6% of the total supply was finalized. This community-first distribution reflects real market demand and leaves room for future community rewards.

Key Data of Space Public Sale

Total funds raised: Over $20 million

Token allocation ratio: 19.6% of total supply (from 51% community pool)

FDV valuation: About $69 million

Refund amount: Over $7.3 million

Original soft cap: $2.5 million (expanded to over $20 million)

To ensure large-scale fair distribution, Space implemented the following protections: large donations were significantly reduced, smaller participants received higher fill rates, and after final review, over $7.3 million in excess capital was refunded. Ownership will now be distributed across thousands of wallets.

UFO Gaming’s Past Sparks Cash-Out Suspicions

It is reported that Space has raised community doubts due to its fundraising scale and the team’s background. Several community members pointed out that the team’s predecessor was suspected to be the game project UFO Gaming, whose token price has plummeted about 99% from its all-time high. The community accuses Space of shifting to a prediction market after little progress with the old project, and has yet to release any public or private test versions. Instead, they prioritized preparing Hyperliquid perpetual contracts, raising suspicions of cashing out.

UFO Gaming’s 99% decline is an extremely serious failure record. If Space’s team is indeed related to UFO Gaming, it would severely damage its credibility. The crypto community is highly wary of “serial failed entrepreneurs,” as such teams often adopt a “pump and dump” strategy: launching a project, raising funds, then failing and rebranding to do it again.

Even more concerning is that Space has not released any public or private test versions to date. For a project that has raised over $20 million, having no usable product is highly unusual. Typically, crypto projects launch testnets or minimum viable products (MVPs) before the public sale to verify technical feasibility. Space skipped this step and went straight to fundraising, giving an impression of “raising money first, then talking.”

The accusation that they prioritized developing Hyperliquid perpetual contracts further deepens cash-out suspicions. Hyperliquid is a decentralized perpetual contract platform. If Space prioritized developing perpetual contracts over core prediction market products, it could imply that the team’s real intent is to quickly cash out through token listing and perpetual trading, rather than long-term building of the prediction market ecosystem.

Additionally, the community is dissatisfied with the project’s increase in public sale amount without prior announcement after oversubscription, and notes that some large refund addresses are new addresses with no transaction history. While new addresses with no history could be normal for security reasons (using fresh cold wallets for refunds), they could also be signs of money laundering or利益输送. In the absence of transparency, the community tends to assume the worst.

Can Fund Use Promises Be Fulfilled?

Funds raised will mainly be used for leverage pools, liquidity onboarding, security audits, team expansion, and CEX listings. Space detailed these uses in its official explanation. Funds for leverage pools will be used to initiate and support leverage pools, enabling traders to trade efficiently while maintaining system solvency during market volatility. Listing on CEXs will involve strategic exchange partnerships to expand market access and liquidity. Team expansion funds will be used for engineering, operations, security, and community support. Security and audit funds will be allocated for smart contract audits, ongoing monitoring, and maintenance to protect community funds and protocol integrity.

These promises sound reasonable and necessary, but the key lies in execution and transparency. Space needs to regularly publish fund usage reports, allowing the community to monitor every expenditure. Additionally, product development progress must accelerate, and a usable prediction market platform should be launched as soon as possible to prove that the team is genuinely building rather than cashing out and fleeing.