Key Takeaways:
South Korean prosecutors have charged five individuals behind the Solana-based memecoin CatFi in the country's first decentralized-exchange rugpull prosecution under the Virtual Asset User Protection Act, which took effect in July 2024.
The Seoul Southern District Prosecutors' Office filed charges against two main suspects who were taken into custody, along with three others — one indicted without detention and two accused of helping the primary suspect evade authorities, according to a Wednesday official release.
"This marks the first time that the 'Virtual Asset User Protection Act' has been applied to penalize a rugpull scheme — a pervasive crime in the crypto market — under fraudulent and unfair trading regulations," the prosecutors said in the translated release. "It's also the first legal prosecution of a crypto crime executed through a DEX, which has been in a regulatory blind spot."
The suspects allegedly launched CatFi on Solana memecoin launchpad Pump.fun in early 2025, using about 10 million won ($6,500) in starting capital. The token's price surged 1,001-fold within 26 hours, drawing roughly 6,000 buyers before the operators sold off their holdings. Prosecutors said 256 investors reported combined losses of 900 million won, or about $600,000, while the group generated approximately 400 million won ($260,000) in illicit profits.
How the Scheme Worked
The main suspect, identified by the surname Park, operated the "Eth Father" social media account, posing as an independent influencer who recommended CatFi to followers, prosecutors said. A second suspect managed the memecoin's official channel, artificially inflating follower counts and posting false announcements of lock-up plans to drive traction.
The group distributed tokens across multiple wallets and conducted wash trading to conceal their control over the supply, according to the release. Although online sleuths had previously identified the suspects and their wallet addresses and reported them to authorities, police closed the case without resolution after the suspects claimed they had been hacked.
The Financial Services Commission referred the case to prosecutors, whose Virtual Asset Crime Joint Investigation Unit worked with financial and tax authorities to track down the suspects. One had been on the run for three months while using multiple disguises. Authorities arrested two suspects on May 11 and the remaining three on Wednesday.
Legal Significance
The case marks the second known matter under the Virtual Asset User Protection Act, after an earlier centralized-exchange case involving alleged price manipulation of the Fusionist token (ACE) on Bithumb in January 2025. The CatFi indictment is the first to target a DEX-based scheme, extending South Korea's enforcement reach beyond centralized exchanges and listed tokens.
The prosecution said it would "resolutely deal with acts that disrupt the digital asset market and undermine public trust." The case may now serve as a reference point for how South Korea handles memecoin fraud, social media promotion, and DEX trading under its virtual asset law.
South Korea has continued to widen its crypto oversight. Lawmakers proposed rules in February requiring financial influencers to disclose crypto holdings and paid compensation when promoting tokens. In April, the Financial Services Commission ordered domestic exchanges to run five-minute balance checks and add automatic trading halts for large mismatches after a major Bithumb payout error.
This article is for informational purposes only and does not constitute investment advice.
