South Korean authorities have charged several individuals connected to the Solana based meme coin project CatFi, marking the first prosecution under the country’s new Virtual Asset User Protection Act. The case follows allegations that the project was used to carry out a coordinated rug pull after attracting substantial investor funds.
According to a statement released on Wednesday by the Seoul Southern District Prosecutors’ Office, five people have been charged in relation to the scheme. Two of the main suspects are currently in custody, while three others have been indicted without detention.
Fake Promotions and Misleading Investor Tactics
Investigators claim the group launched CatFi in early 2025 through Pump.fun, a Solana meme coin platform. The token quickly gained investor attention after its listing, but prosecutors allege the team abandoned the project once significant capital had been collected.
The case is considered a landmark legal action because it is the first time South Korea’s Virtual Asset User Protection Act has been applied to a rug pull involving fraudulent and unfair trading practices. It is also believed to be the country’s first prosecution involving a cryptocurrency crime conducted through a decentralized exchange, an area that has traditionally been difficult for regulators to oversee.
Authorities allege the suspects created a deceptive marketing network to generate interest in CatFi. One individual reportedly posed as an independent cryptocurrency influencer and promoted the token to potential investors. Another suspect managed official project communications, where follower counts were allegedly inflated and false claims were made about token lockup arrangements to create an illusion of stability and long term commitment.
Prosecutors further claim the group moved tokens between multiple wallets and engaged in wash trading to conceal their control over the supply while creating the appearance of genuine market activity. Following the launch, CatFi’s price reportedly soared by approximately 1,001 times within just 26 hours. During that period, around 6,000 investors purchased the token.
Millions Lost by Investors
Authorities stated that 256 investors later reported combined losses of roughly 900 million Korean won, equivalent to about $600,000. Meanwhile, the suspects are believed to have earned more than 400 million won in profits.
The project initially attracted attention from blockchain analysts who traced wallet activity and publicly identified those allegedly involved. However, police initially closed the investigation after the suspects claimed they had been victims of a hacking incident.
The case was reopened after South Korea’s Financial Services Commission referred it to prosecutors. A joint investigation involving a specialized cryptocurrency crime unit, financial regulators, and tax authorities eventually tracked down the suspects. One individual reportedly avoided arrest for three months by using disguises.
Two suspects were arrested on May 11, while the remaining three were detained later on Wednesday.
Pump.fun Remains Highly Active Despite Concerns
Pump.fun has faced growing criticism for facilitating speculative token launches on Solana, where many newly created meme coins have been linked to scams such as rug pulls and pump and dump schemes. The platform’s simple token creation process and low transaction costs have contributed to rapid trading activity.
Despite these concerns, Pump.fun became one of the highest revenue generating applications within the Solana ecosystem in 2025. It was among seven Solana based applications that generated more than $100 million in revenue during the year.#crypto#cryptonews https://coinsignals.net https://t.me/coinsignalpublic
