South Korea makes first DEX rug-pull arrests in Solana CATFI case

• South Korean prosecutors charge 5 people in a CATFI memecoin rug pull case.
• About 256 investors lost roughly $650K after the CATFI token crashed.
• CATFI token surged 1,000x before liquidity was drained and the price collapsed.

South Korean prosecutors have arrested and charged a group of individuals linked to the Solana-based CATFI memecoin over an alleged decentralised exchange (DEX) rug pull.

The case marks the country’s first formal criminal action targeting a memecoin scam that unfolded entirely through a decentralised trading environment.

According to a local news outlet, authorities say the operation affected hundreds of retail investors and generated substantial illicit gains before collapsing after a rapid price spike and liquidity drain.

How the CATFI memecoin scheme unfolded

The CATFI token was launched on Solana and traded primarily through decentralised platforms, including Pump.fun.

Investigators allege that the operators positioned the token as a high-potential memecoin and used aggressive online promotion to attract early buyers.

A key figure in the promotion reportedly used the alias “Eth Father,” presenting themselves as a credible community leader.

This identity was used across social channels to build trust and encourage early participation in the token.

Once liquidity and trading activity increased, prosecutors say the operators engaged in coordinated trading behaviour designed to simulate organic demand.

This included wallet splitting and wash trading patterns that created the appearance of active market interest.

At its peak, CATFI experienced a dramatic surge, reportedly increasing by more than 1,000 times in value within a short period.

That rapid rise was followed by a sudden collapse after liquidity was withdrawn and large holdings were sold off, a structure consistent with what authorities describe as a classic rug pull.

Arrests, charges, and financial impact

The Seoul Southern District Prosecutors’ Office Virtual Asset Crime unit led the investigation.

Officials confirmed that two primary suspects were arrested, while five individuals in total were charged in connection with the scheme.

Additional suspects are also being investigated for allegedly helping key figures evade arrest during the inquiry.

The case is being prosecuted under South Korea’s Virtual Asset User Protection Act, which was recently introduced to address fraud and manipulation in the digital asset market.

Authorities estimate that around 256 investors were directly affected by the CATFI collapse.

Total losses are reported at approximately 900 million won, which is about 650,000 US dollars based on prevailing exchange rates.

Investigators also identified roughly 400 million won, or about 260,000 US dollars, in illicit profits linked to the scheme.

The investigation suggests that the operators extracted value through early liquidity positions and coordinated sell-offs, leaving late participants exposed to the sharp price reversal.

Why this case is significant for South Korea’s crypto enforcement

This is the first known case in South Korea where prosecutors have pursued criminal charges specifically tied to a DEX-based memecoin rug pull.

Unlike earlier enforcement actions that focused mainly on centralised exchanges or structured investment fraud, this case extends legal scrutiny directly into decentralised trading environments.

The prosecution has made it clear that the use of decentralised platforms does not shield individuals from criminal responsibility.

By applying the Virtual Asset User Protection Act to on-chain activity, authorities are signalling that token creators and promoters can be held accountable even when no centralised intermediary is involved.

The CATFI memecoin case also highlights how quickly memecoin ecosystems can amplify both gains and losses.

The token’s reported 1,000x surge drew in a large number of retail traders, but the subsequent collapse wiped out those gains almost immediately after liquidity was removed.

With 256 confirmed victims and losses reaching hundreds of millions of won, regulators appear to be treating the incident as more than a simple market failure.

Instead, it is being positioned as a coordinated financial fraud operation built around token manipulation and misleading promotion.

The outcome of this case is likely to influence how future memecoin projects are launched and monitored in South Korea.

Prosecutors are now actively tracing wallet activity, promotional networks, and liquidity movements tied to token launches on decentralised exchanges.