First-ever virtual currency fraud case based on the new Investor Protection Act

South Korean authorities pursued the suspect for months after the CatFi case was initially dismissed, despite early blockchain detective reports and evidence.

South Korean prosecutors have indicted a group of individuals associated with a Solana-based meme coin project called CatFi after the token was allegedly used in an organized rug pull scheme after collecting investor funds.

The Seoul Southern District Prosecutors’ Office confirmed in a statement on Wednesday that five people have now been indicted in connection with the incident, with two of the main suspects in custody and three others facing indictment.

Influencer tricks, fake lockups

Investigators say the group created and launched CatFi through the Solana meme coin platform Pump.fun in early 2025. Although it was successful in attracting investors soon after going public, the project was discontinued once the tokens had enough funds. Prosecutors emphasized that the case is of legal significance, as it marks the first time that the country’s Virtual Asset User Protection Act has been used to prosecute illegal activities based on deceptive and unfair trade provisions. Interestingly, this is also the first known prosecution related to crypto crimes carried out through decentralized exchanges, which until now have been largely unregulated.

According to the investigation results, the suspects did not solely rely on the token mechanism to garner attention, but also built a misleading promotional ecosystem around the project. One of the suspects reportedly claimed to be an independent cryptocurrency influencer online and used that identity to drum up investment interest in CatFi. Meanwhile, another company was in charge of the project’s official communications, which included artificially inflated follower counts and posted announcements alleging bogus token lockup arrangements meant to suggest stability.

Authorities further allege that the group engaged in wash trading activity by distributing tokens across multiple wallets to disguise supply control and create genuine market demand. CatFi’s price reportedly skyrocketed dramatically in the hours following its launch, increasing approximately 1,001 times within 26 hours, during which time approximately 6,000 investors purchased the token.

According to prosecutors, 256 of these investors later reported losses totaling about 900 million Korean won (equivalent to about $600,000), and the suspects are believed to have secured profits of more than 400 million won. The scheme initially attracted the attention of online blockchain analysts who tracked wallet activity and publicly identified those involved, but police at the time closed the case after the suspects claimed to be victims of hacking.

The matter escalated further when the Financial Services Commission referred the matter to prosecutors, ultimately leading to a joint investigation involving the Cryptocurrency Crime Unit and financial and tax authorities to track down the suspects, including one who evaded arrest for three months using disguises.

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Two suspects were arrested on May 11, and the remaining three were taken into custody late Wednesday.

Active user activity despite suspicions

Pump.fun has come under intense scrutiny for enabling large-scale speculative token activity on Solana, with most of the newly minted meme coins associated with scams such as rug pulling and pump-and-dump schemes. The platform’s ease of token creation and low transaction costs facilitated quick transactions.

Nevertheless, Meme Coin Launchpad has emerged as one of the most revenue-generating applications in the Solana ecosystem in 2025. In fact, it was one of seven Solana apps to generate more than $100 million in revenue that year.