MegaETH Cancels $1 Billion Token Sale After Technical Failures

TLDR

• MegaETH canceled plans to expand its token sale from $250 million to $1 billion after technical failures disrupted the pre-deposit event on Tuesday
• Configuration errors and KYC system failures from partner Sonar prevented verified users from accessing the platform during the scheduled opening
• A multisig transaction meant for later use was executed too early, allowing unverified deposits to flow in and fill the $250 million cap instantly
• The team froze deposits at $500 million and will offer withdrawals to users who want refunds while crediting them toward future rewards
• No user funds were at risk during the technical breakdown, but MegaETH acknowledged the launch experience was unacceptable

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MegaETH has abandoned its plan to raise $1 billion after a series of technical problems disrupted its pre-deposit event on Tuesday. The Ethereum layer-2 project initially aimed to collect $250 million from verified users but encountered multiple system failures that forced the team to halt expansion plans.

The pre-deposit window was designed to give KYC-verified users early access to lock in MEGA token allocations. Users would deposit USD Coin in exchange for USDm, a stablecoin being built with Ethena’s framework. The system broke down almost immediately after launch.

Configuration errors caused MegaETH’s Know Your Customer system to fail during the opening. The KYC partner, Sonar, experienced rate-limit issues that prevented users from completing verification. This blocked legitimate participants from accessing the deposit platform during the scheduled window.

A second problem emerged when a fully signed Safe multisig transaction was executed ahead of schedule. The team had prepared this transaction for a later cap increase. The early execution allowed new deposits to flow into the system before the team was ready.

How the $250 Million Cap Was Filled

The combination of failures created an unintended opening in the deposit window. Users who kept refreshing the pre-deposit website caught the random opening time. The $250 million cap filled almost instantly with deposits from people who happened to be monitoring the page.

The team attempted to fix the issues and raise the cap to $400 million, then $500 million. Each attempt came too late. The contract became oversubscribed before the new limits could take effect properly.

MegaETH froze deposits at $500 million and decided not to proceed with the planned $1 billion raise. The team said no user funds were at risk during the technical breakdown. They acknowledged the launch experience failed to meet expectations.

A withdrawal page is being prepared for users who want their funds returned. Participants who request refunds will still receive credit toward the MEGA token rewards program. The team plans to publish a detailed explanation of what went wrong and how they will prevent similar issues in the future.

Background on MegaETH and the Token Auction

The pre-deposit event followed a successful MEGA token auction that concluded on October 30. That auction offered 5 percent of the 10 billion token supply and attracted over $1.3 billion in commitments. The sale was fully subscribed within minutes of opening.

Bids in the auction ranged from $2,650 to $186,282 per allocation. Participants had the option to lock tokens for one year in exchange for a 10 percent discount. The overwhelming demand meant MegaETH would use a special allocation mechanism to distribute tokens among participants.

MegaETH is backed by major figures including Ethereum co-founders Vitalik Buterin and Joe Lubin. The project launched its testnet in March and aims to process 100,000 transactions per second with sub-millisecond latency. The MEGA token is scheduled to launch in early 2026.

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