South Korea has taken a major step in crypto enforcement after prosecutors made the country’s first arrest and prosecution tied to a decentralized exchange rug pull case.
South Korea has taken a major step in crypto enforcement after prosecutors made the country’s first arrest and prosecution tied to a decentralized exchange rug pull case. Authorities charged a criminal group accused of manipulating the price of a Solana-based meme coin called CATFI before allegedly dumping the token and causing major investor losses.
The case is now being viewed as a landmark moment for crypto regulation in South Korea because prosecutors are expanding enforcement beyond centralized exchanges and targeting fraud happening directly on decentralized platforms.
According to prosecutors from the Seoul Southern District Prosecutors’ Office, the accused group allegedly created and promoted the meme coin CATFI earlier this year using the Solana ecosystem.
The token was reportedly launched through Pump.fun, a popular platform widely used for launching Solana meme coins.
Investigators claim the group later listed the token on decentralized exchanges before carrying out a coordinated rug pull scheme. Authorities arrested two suspects connected to the case and formally indicted them on market manipulation charges.
One additional suspect was indicted without detention, while two others were accused of helping the main suspect attempt to flee.
Prosecutors identified the main suspect only by the surname Park. According to investigators, Park allegedly operated online under the influencer identity “Eth Father.”
Authorities claim he falsely presented himself as an independent third-party crypto influencer while secretly controlling and promoting the CATFI project.
Investigators said the group promoted CATFI through misleading social media posts, inflated follower counts, posted false positive announcements and encouraged investors to buy the token
At the same time, prosecutors allege the suspects secretly controlled the token supply and manipulated trading activity behind the scenes.
According to local reports, CATFI’s price reportedly surged more than 1,001 times within just 26 hours after launch. The rapid rise attracted roughly 6,000 investors into the token.
However, prosecutors say the project later collapsed after insiders dumped holdings and drained liquidity from the market.
Authorities estimate that around 256 investors suffered combined losses of approximately, 900 million Korean won
or roughly $586,000.
Meanwhile, prosecutors believe the suspects generated roughly 400 million won or around $260,000 in illegal profits.
Investigators claim the group attempted to hide control over the token by spreading CATFI holdings across multiple wallets.
Authorities also accused the suspects of using circular trading techniques designed to artificially inflate trading activity and create the appearance of market demand.
According to prosecutors, these actions amounted to, fraudulent market manipulation, false statements tied to digital asset trading and deceptive investor practices
The case is particularly significant because it marks the first known decentralized exchange drug prosecution under South Korea’s Virtual Asset User Protection Act.
The CATFI prosecution comes as South Korea continues aggressively expanding crypto oversight across the country.
Earlier this year, authorities also pursued a separate case involving alleged price manipulation tied to the Fusionist (ACE) token on Bithumb. That earlier investigation became one of the first fast-tracked enforcement actions under the same virtual asset law.
South Korean regulators have also recently proposed new rules requiring financial influencers to disclose crypto holdings, sponsored promotions and paid compensation tied to digital asset marketing.
The government is increasingly focusing on meme coin speculation, influencer promotions, and market manipulation risks.
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