South Korean prosecutors have charged five people for orchestrating a rug pull on the Solana-based meme coin CATFI, marking the country's first criminal prosecution tied to a decentralized exchange scheme. The case, led by Seoul's new investigative crime unit for virtual assets, targets a group that allegedly made about 400 million won ($260,000) in illicit profits while causing 900 million won ($650,000) in losses across 256 investors.
How the CATFI Scheme Worked
The main suspect, identified only as Park, operated a social media account under the alias 'Eth Father.' Posing as an unrelated third party, Park promoted CATFI to followers. He and his associates issued the token on Pump.fun, a Solana token launchpad, using roughly 10 million won in startup capital. To hide their control of the supply, they used multiple wallets and circular trades.
CATFI's price skyrocketed about 1,001 times within 26 hours, drawing in roughly 6,000 buyers. Then the operators dumped their holdings, and the token collapsed. The crash left 256 investors holding losses totaling 900 million won.
First Test of Korea's New Virtual Asset Law
The charges are the first use of fraudulent trading provisions under Korea's user protection law, which took effect in July 2024. Prosecutors indicted two suspects and detained them, charged one without detention, and separately charged two accomplices for helping Park evade investigators.
Solana has seen similar rug pulls before, but prosecutions tied to DEX activity have been rare globally. South Korea's move signals a tougher stance on decentralized finance fraud, even as regulators struggle to police blockchain-based platforms that operate across borders.
Prosecutors Warn of Future Crackdowns
In a statement, prosecutors said they would respond firmly to schemes that erode market trust. The case also highlights the growing role of specialized units like Seoul's virtual asset crime team, formed to handle the rising number of crypto-related frauds.
For now, the detained suspects await trial. The case will test whether Korea's new legal tools can effectively prosecute crimes that span multiple jurisdictions and involve pseudonymous actors. Questions remain about how authorities will track similar schemes on platforms like Pump.fun, where token creation is cheap and anonymous.
