South Korea charged CatFi operators under newly enforced crypto investor protection regulations. Prosecutors accused suspects of fake promotions, wash trading, and token manipulation. Authori
South Korean prosecutors charged five individuals connected to the Solana-based memecoin project CatFi, marking the country’s first rugpull prosecution under its new crypto investor protection law. Authorities accused the group of manipulating investors through fake promotions, hidden token control, and deceptive trading activity.
According to prosecutors, the suspects launched CatFi through the Solana memecoin platform Pump.fun during early 2025 before abandoning the project shortly after attracting investor funds. Authorities stated that two suspects remain in custody, while three others face prosecution without detention.
The Seoul Southern District Prosecutors’ Office described the case as the first prosecution involving fraudulent trading practices under the “Virtual Asset User Protection Act.” Additionally, prosecutors said the investigation represents the first crypto crime case tied directly to decentralized exchange activity, an area regulators previously struggled to oversee.
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According to the official release, one suspect pretended to operate as an independent crypto influencer while encouraging followers to purchase CatFi tokens. Meanwhile, another suspect reportedly controlled the project’s official social media accounts and artificially boosted follower numbers to create false credibility.
Investigators also alleged that the group posted misleading lock-up announcements to convince investors that insiders could not rapidly sell tokens. Consequently, many traders entered positions believing the project carried lower dumping risks.
Beyond the promotional campaigns, authorities accused the suspects of spreading token holdings across multiple wallets to disguise supply ownership. Prosecutors further alleged the group conducted wash trading operations to create misleading trading activity while maintaining control over the token supply.
S. KOREA MAKES FIRST DEX RUG PULL ARREST
South Korean prosecutors charged a group behind the Solana-based CATFI rug pull, which allegedly caused about $585K in losses for 256 investors.
The main suspect reportedly posed as influencer “Eth Father” while the group made around… pic.twitter.com/0JI219myX0
— Coin Bureau (@coinbureau) May 27, 2026
According to investigators, CatFi’s value surged 1,001 times within 26 hours after launch. During that period, roughly 6,000 investors purchased the token. Authorities stated that 256 investors later reported combined losses totaling nearly 900 million Korean won, equivalent to approximately $600,000. Meanwhile, prosecutors alleged the suspects generated more than 400 million won in profits from the scheme.
Online blockchain researchers reportedly identified the suspects and submitted wallet information to police earlier in the investigation. However, authorities initially closed the case after the suspects claimed hackers compromised their accounts. Prosecutors reopened the investigation following a referral from the Financial Services Commission.
Authorities later tracked one suspect who allegedly avoided arrest for three months while using several disguises. Prosecutors arrested two suspects on May 11 before taking the remaining individuals into custody Wednesday.
South Korean prosecutors stated that the investigation sends a strong warning to individuals attempting illegal profits through crypto market manipulation. Authorities added that they will continue targeting fraudulent trading operations across the digital asset sector.
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