South Korean prosecutors have launched the country’s first criminal fraud case tied to decentralized exchange (DEX) trading under the Virtual Asset User Protection Act, as authorities intensify their crackdown on crypto-related market manipulation and rug pull schemes.
According to a local media report, the Seoul Southern District Prosecutors’ Office announced the arrest and indictment of multiple individuals accused of orchestrating a large-scale Solana-based memecoin fraud involving the token CATFI.
Prosecutors alleged the group issued the memecoin through Pump.fun before listing it on decentralized exchanges and later executing a rug pull operation that left investors with major losses.
Authorities said the suspects generated nearly 400 million won (~$267K) in illicit profits after using only around 10 million won (~$6,672) in initial criminal funding.
Prosecutors allege fake promotions and coordinated trading
Investigators claimed the group aggressively promoted CATFI through manipulated social media campaigns, false project announcements, and deceptive influencer activity.
The alleged mastermind, identified by prosecutors only as Mr. Park, reportedly operated online under the alias “Etherfather” while pretending to act as an independent third-party promoter of the token.
Authorities said the suspects:
- Manipulated follower counts on project social media accounts
- Published misleading promotional announcements
- Distributed token holdings across multiple wallets
- Conducted circular trading to hide an insider-controlled supply
- Encouraged investors to purchase the token before dumping holdings
Prosecutors argued these actions violated provisions under South Korea’s Virtual Asset User Protection Act that prohibit fraudulent trading practices and false representations tied to digital asset transactions.
CATFI surged 1,001x before collapse
According to investigators, CATFI’s price surged approximately 1,001-fold within just 26 hours after launch during the peak of South Korea’s memecoin trading frenzy earlier this year.
Authorities estimated that nearly 6,000 investors purchased the token, while at least 256 investors suffered combined losses of roughly 900 million won (~$600K) after the project collapsed.
The prosecution described the case as South Korea’s first criminal indictment specifically focused on fraudulent trading activity involving decentralized exchanges rather than centralized crypto platforms.
It also marks the second known enforcement case under the country’s recently implemented Virtual Asset User Protection Act.
Pump.fun expands beyond Solana amid rising scrutiny
The case arrives as Pump.fun continues rapidly expanding beyond its original Solana-focused ecosystem.
Earlier this week, the platform announced support for Ethereum, Base, and BNB Chain trading within its mobile app, allowing users to access multiple EVM-compatible networks through a single wallet interface.
The expansion highlights how memecoin launchpads are evolving into broader multi-chain trading ecosystems even as regulators intensify scrutiny around speculative token launches, market manipulation, and investor protection risks.
South Korea tightens crypto oversight
The case arrives as South Korea continues expanding oversight of the crypto sector following a series of fraud cases, exchange collapses, and market manipulation scandals.
Regulators and lawmakers have recently intensified efforts to strengthen digital asset investor protections, while political debate around crypto taxation and exchange regulation continues growing nationwide.
Earlier this month, public pressure also mounted against the government’s proposed 22% crypto tax framework scheduled for implementation in January 2027, with petitions opposing the plan surpassing 52,000 signatures.
South Korean prosecutors said they would continue aggressively pursuing individuals involved in activities that “disrupt the digital asset market and undermine public trust.”
The investigation remains ongoing, and authorities are reportedly continuing to trace on-chain wallet activity linked to the CATFI operation.
Also read: UK Moves to Choke Russia’s Crypto-Powered Shadow Economy
