South Korean prosecutors have arrested a suspect for the first time under the Virtual Asset User Protection Act for DEX fraud related to the Solana Meme coin CATFI case.

South Korean prosecutors filed charges in the first decentralized exchange (DEX) rug pull scam case tied to a Solana ecosystem meme coin under the country’s Virtual Assets User Protection Act, local authorities announced May 27. The probe centers on the CATFI token scheme: two key suspects were arrested and prosecuted for market manipulation, one additional individual faces non-detained charges, and two others are accused of aiding the main suspects in evading authorities. The group launched CATFI on the Pump.fun platform in early 2025 before pulling liquidity (the core of a rug pull scam) after listing the token on a DEX. The lead suspect, operating under the internet persona “Eth Father,” promoted CATFI via false positive news, purchased fake social media followers, and used multiple wallets to hoard token supply and run wash trading to obscure their control over the asset. CATFI’s price spiked 1,001 times within 26 hours of its launch, drawing roughly 6,000 investors. Ultimately, 256 victims lost about 900 million South Korean won (around $586,000), while the group generated roughly 4 billion won in illegal proceeds from an initial 10 million won in illicit startup funds. This case represents a key expansion of South Korea’s virtual asset crime crackdown, extending oversight beyond centralized exchanges to DEX platforms. Prosecutors vowed to “vigorously target activities that disrupt digital asset markets and erode public trust.” The ruling could set a critical precedent for handling meme coin fraud, crypto-related social media promotions, and DEX trading violations under the Virtual Assets Act. Earlier in January 2025, South Korea prosecuted its first centralized exchange price manipulation case under the same law; regulators have since tightened rules, including requiring financial influencers to disclose their crypto holdings and paid promotional content.