Space Token Faces Rug Pull Claims After $20M Solana Sale

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The controversy first erupted in January 2026 when the Into Space prediction market project closed its public sale. Community members and analysts quickly labeled the outcome a soft rug.

How the Space Token Sale Played Out

Space Protocol launched its public token sale in early January 2026 through a launchpad structure. The team had previously raised $3 million in a seed round led by Morningstar Ventures and Arctic Digital. The Echo launchpad reported the raise as 1,360% oversubscribed.

On January 21, the team disclosed via its official X account (@intodotspace) that the final raise hit roughly $20 million. Of that amount, $14 million went to the project treasury. Approximately $6 million was returned to participants. Some later reports put the refund figure closer to $7.3 million.

The token sale cleared at $0.069 per token, setting a $69 million fully diluted valuation. The team claimed excess capital was trimmed from large contributions. Smaller buyers reportedly received higher fill rates, and tokens were distributed across thousands of wallets.

Critics Call It a Soft Rug

Crypto analyst Gautam Gupta publicly accused the project of executing a soft rug. Gupta, argued the team raised a massive sum without a live product. He highlighted the heavy reliance on paid KOL campaigns to manufacture hype.

They pointed to aggressive paid promotions by crypto KOLs and a last-minute pivot from gaming to prediction markets. Critics also cited what they called selective refunds favoring insiders.

Gupta also flagged the narrative shift away from UFO Gaming. The Space team previously built UFO, a play-to-earn project. UFO reached a $1.5 billion market cap during the 2021 bull run. Critics viewed the prediction market pivot as opportunistic, timed to capitalize on Polymarket’s mainstream success.

Community trackers reported that cooperating KOLs and larger wallets received preferential treatment during the refund process. Smaller retail buyers faced delays, reduced fills, or no refunds at all, according to posts shared on X.

KOL Promotions at the Center of the Backlash

The Space token sale followed a pattern common in 2026 crypto launches. KOLs with large followings received paid deals or exclusive allocation perks to promote the sale. Their posts drove retail FOMO and oversubscription.

Once the raise closed, the team adjusted allocations and issued partial refunds. The financial relationships between KOLs and the Space team were not publicly disclosed in detail. Some users tagged on-chain investigator ZachXBT, hoping for a detailed thread on wallet flows and KOL payment trails.

This dynamic highlights a growing tension in crypto fundraising. Paid promotions blur the line between organic enthusiasm and coordinated marketing. When the promoted project underdelivers, retail participants absorb the downside while promoters may have already secured their returns.

The Space Team Pushes Back

Space Protocol responded to the backlash on January 21 through a collective X post. The team argued the $2.5 million figure was a soft cap, a common launchpad term. They defended it as a flexible floor rather than a hard ceiling.

The team maintained that excess capital secured a multi-year runway without compromising delivery timelines. They also said the additional funds prevented the project from being undercapitalized, a common failure mode for early-stage crypto ventures.

No senior executive issued a separate on-the-record statement beyond the group post. The project has not released a post-mortem or independent audit of fund usage. The Block noted the absence of formal accountability measures.

Refund Portal Goes Dark

By late January, users reported the dedicated refund site had gone offline. The team did not publicly explain why the portal was taken down. Fresh accusations followed, with community members arguing the process was never designed to be fully transparent.

As of April 30, the portal remains inactive. Users continue referencing the Space token rug pull episode as a textbook example of influencer-backed overpromising with limited accountability.

The $SPC token launched on exchanges but traded at steep discounts relative to sale prices. Community sentiment remains dominated by calls for full accountability and independent treasury reviews.

Broader Implications for Prediction Markets and Launchpads

The Space controversy matters because prediction markets represent a legitimate and growing sector. Established players like Polymarket and Opinion Labs built their platforms through years of focused development and institutional backing.

Space raised eight times its stated target through KOL networks. It then delivered partial refunds and a narrative change without a working platform. That pattern reinforces skepticism toward the launchpad ecosystem.

The episode also raises questions about soft cap mechanics. A project raised $20 million against a $2.5 million target with no enforceable ceiling. In that scenario, the stated cap offers little protection for retail participants.

What Happens Next for Space Protocol

The team has not announced new product milestones or additional refund waves in recent weeks. No working prediction market platform has launched as of this writing.

For the broader market, the Space token rug pull story serves as a cautionary reminder. Even projects on reputable chains like Solana can face credibility crises when fundraising outpaces transparent execution. Retail participants and KOL audiences now watch for signs of product delivery. Without it, the allegations could harden into a defining case study in launchpad failures.

This article is for informational purposes only and does not constitute financial advice. Always conduct your own research before making investment decisions.