South Korea Cracks Down on CatFi Rugpull: First-Ever Crypto Fraud Case Under New Investor Protection Law
South Korean prosecutors have filed costs towards a bunch of people linked to a Solana-based meme coin challenge referred to as CatFi, following allegations that the token was utilized in a coordinated rugpull scheme after attracting investor funds.
The Seoul Southern District Prosecutors’ Office confirmed in its Wednesday assertion that 5 people are actually dealing with costs in reference to the case, together with two essential suspects who’ve been positioned in custody and three others who’ve been indicted with out detention.
Influencer Ruse, Fake Lockups
Investigators say the group created and launched CatFi in early 2025 by way of the Solana meme coin platform Pump.enjoyable. It managed to attract in buyers quickly after itemizing, solely to desert the challenge as soon as sufficient cash had entered the token. Prosecutors highlighted that the case is legally vital as a result of it’s the first time the nation’s Virtual Asset User Protection Act has been used to prosecute a rug pull underneath fraudulent and unfair buying and selling provisions. Interestingly, it is usually the primary identified prosecution involving a crypto crime carried out by way of a decentralized trade, which had beforehand remained largely outdoors regulatory attain.
According to the findings, the suspects didn’t rely solely on token mechanics to generate curiosity however allegedly constructed a deceptive promotional ecosystem across the challenge. One of the accused reportedly offered himself on-line as an unbiased crypto influencer, utilizing that id to push funding curiosity towards CatFi. Meanwhile, one other dealt with official challenge communications, the place follower numbers had been artificially inflated, and bulletins had been posted claiming pretend token lock-up preparations meant to counsel stability.
Authorities additional allege that the group circulated tokens throughout a number of wallets and carried out wash buying and selling exercise to disguise their management over provide and to create the looks of real market demand. In the hours following launch, CatFi’s value reportedly surged dramatically, rising by roughly 1,001 occasions inside a 26-hour window, throughout which about 6,000 buyers purchased into the token.
Prosecutors mentioned that 256 of those buyers later reported whole losses amounting to round 900 million Korean gained, which is roughly equal to $600,000, whereas the suspects are believed to have secured earnings exceeding 400 million gained. The scheme had initially drawn consideration from on-line blockchain analysts who traced pockets exercise and publicly recognized these concerned, however police on the time closed the case after the suspects claimed they’d been victims of hacking.
The matter was later escalated when the Financial Services Commission referred it to prosecutors, which finally led to a joint investigation involving a devoted crypto crime unit in addition to monetary and tax authorities, that tracked down the suspects, together with one particular person who had evaded seize for 3 months utilizing disguises.
Arrests adopted on May 11 for 2 suspects, whereas the remaining three had been detained later on Wednesday.
High User Activity Despite Allegations
Pump.enjoyable has come underneath intense scrutiny for enabling large-scale speculative token exercise on Solana, the place most newly created meme cash are linked to scams like rug pulls and pump-and-dump schemes. The platform’s ease of token creation and low transaction prices drove fast buying and selling.
Despite this, the meme coin launchpad emerged as one of many Solana ecosystem’s high revenue-generating purposes in 2025. In truth, it was one in every of seven Solana apps that earned over $100 million in income in the course of the 12 months.
The submit South Korea Cracks Down on CatFi Rugpull: First-Ever Crypto Fraud Case Under New Investor Protection Law appeared first on CryptoPotato.
