South Korea Makes First DEX Rug Pull Arrest in Catfi Case
The Seoul Southern District Prosecutors’ Office in South Korea has arrested and indicted the operators behind Catfi, marking the country’s first prosecution related to a rug pull on a decentralized exchange (DEX).
The case, brought under the Virtual Asset User Protection Act, accuses the group of market manipulation after 256 investors lost 900 million won ($586,000) when liquidity was drained following an artificial price surge.
According to Digital Asset, South Korean prosecutors charged a criminal group accused of manipulating the price of the Solana-based meme coin CATFI and generating approximately 400 million won (~$260,000) in illegal profits.
The scheme began on Pump.fun in early 2025. The main suspect, identified by the surname Park and operating online as the influencer ‘Eth Father,’ created Catfi before listing it on a decentralized exchange. Park allegedly posed as an unrelated third party to recommend purchases, inflated follower counts, managed project social accounts, and spread tokens across multiple wallets while using circular trading to obscure issuer control.
Catfi’s price surged 1,001-fold within 26 hours of issuance, attracting 6,000 investors before the liquidity vanished. The group used approximately 10 million won in criminal funds and profited 400 million won, or $260,000.
Regulatory Shift
Until the Catfi case, South Korea’s virtual asset enforcement primarily focused on centralized exchanges. DEX fraud existed in a legally ambiguous area due to non-custodial design, pseudonymous wallet operators, and the absence of a regulated intermediary, making it difficult to assign criminal liability under frameworks designed for traditional finance or even centralized exchange (CEX) abuse.
The Virtual Asset User Protection Act, which took effect in July 2024, provided prosecutors with a statutory basis, covering “the use of fraudulent means, plans, or techniques” and false statements about material facts in digital asset trading, regardless of venue.
The Catfi prosecution is only the second known case under the Act, following the January 2025 ACE token manipulation case on Bithumb, but the first to target a DEX environment.
The Seoul Southern District prosecutors explicitly stated their enforcement mandate, declaring the office would “resolutely deal with acts that disrupt the digital asset market and undermine public trust.”
DeFi regulation in South Korea has shifted from exchange oversight to on-chain conduct, and operators who believed decentralization offered immunity are now taking note.
Investigative Template
The Catfi case illustrates the investigative methods that make on-chain forensics increasingly dangerous for rug pull operators. Prosecutors identified circular trading patterns and coordinated wash trades across wallets controlled by the issuing group, which created artificial volume and masked insider ownership concentration.
The off-ramp, where criminal proceeds are converted into fiat or stablecoins, typically exposes the operators. This process often involves centralized exchanges with Know Your Customer (KYC) obligations, revealing the identities of pseudonymous operators.
South Korea’s enforcement bodies have developed this pattern across prior cases. The 149-arrest USDT laundering ring announced earlier this year demonstrated prosecutors’ ability to map complex multi-wallet schemes at scale. The Catfi group’s use of approximately 10 million won in traceable criminal funds suggests the on-chain trail was coherent enough to support the indictment.
Two suspects were arrested and indicted for market manipulation; one was indicted without detention; two others were charged for assisting the main suspect’s flight. Similar reconstruction methods were used in the Squid protocol exploit, where on-chain tracing helped identify the flow of drained funds across multiple transactions.
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