South Korean prosecutors this week charged a group of individuals over the CATFI memecoin rug pull, marking the first time a decentralized exchange scam has been prosecuted under the nation's dedicated crypto legislation. The case sets a legal precedent for how authorities handle token fraud on DEX platforms going forward.
The charges
Prosecutors said the group behind CATFI orchestrated a classic rug pull—dumping their token holdings after artificially inflating its price, then disappearing with investor funds. The exact amount lost hasn't been disclosed, but the case is the first to test South Korea's crypto-specific law against a DEX-based scheme.
South Korea has some of the strictest crypto regulations in Asia, but enforcement has mostly focused on centralized exchanges and large-scale fraud. This case signals that DEX platforms, often seen as regulatory gray zones, are no longer off the hook. The law defines virtual assets broadly, and prosecutors are now using that definition to pursue on-chain scams.
What comes next
The defendants will face trial on charges under the Act on the Protection of Virtual Asset Users, which took effect in 2024. A conviction could carry prison time and fines. Court proceedings are expected to begin in the coming weeks.
