The Southern District Prosecutor’s Office in Seoul, South Korea, has arrested and formally charged the operators of the Catfi project, making it the first prosecution in the country for a rug pull scam linked to a decentralized trading platform (DEX).
The case is based on the Virtual Asset User Protection Act, in which the group is accused of market manipulation after 256 investors lost around 900 million won (equivalent to $586,000), following the withdrawal of liquidity following an artificial price rise.
The fraudulent scheme began on the Pump.fun platform in early 2025, with the main defendant, who goes by the nickname “Park” and is digitally active as an influencer under the name “Eth Father”, creating Catfi before listing it on a decentralized exchange. Investigations allege that Park posed as an independent third party to recommend purchasing the coin, inflated the number of followers, and managed the project’s social media accounts, distributing the coins to multiple wallets and using circular trading to hide control of the issuer.
Catfi’s price increased 1,001 times in just 26 hours after its release, attracting around 6,000 investors before liquidity completely disappeared. The group used approximately 10 million won in criminal funds to carry out the scheme and walked away with a profit of 400 million won, or approximately $260,000.
Catfi arrests and regulation of the decentralized finance (DeFi) sector in Korea
Before the Catfi case, law enforcement efforts in South Korea focused almost entirely on centralized platforms. Fraud crimes related to decentralized exchanges (DEXs) have fallen into a legal gray area; Due to its non-custodial nature, use of anonymous wallets, and lack of a regulated intermediary, it has made it difficult to determine criminal liability within legal frameworks designed for traditional finance or even centralized platforms.
However, the Virtual Asset User Protection Act, which took effect in July 2024, gave prosecutors a solid legal basis, covering “the use of fraudulent means, schemes or techniques” and misrepresentations of material facts in the course of trading digital assets, regardless of where the trading takes place.
The prosecution against Catfi is the second known case under this law, following the ACE coin manipulation case on the Bithumb platform in January 2025, but it is the first to extend to the decentralized trading environment.
Seoul prosecutors have clearly outlined their enforcement mandate, emphasizing that the office will “firmly address actions that destabilize the digital asset market and undermine public trust.”
DeFi regulation in South Korea has now shifted from simply censoring platforms to monitoring on-chain behavior, putting operators who thought decentralization meant immunity in the position of having to carefully recalculate.
Criminal Tracking Mechanism
The Catfi case illustrates the investigative paradigm that makes chain forensics a growing risk for Rug Pull operators. The plaintiffs identified patterns of circular trading and fictitious transactions coordinated between wallets controlled by the issuing group, which created fictitious trading volume and concealed the concentration of ownership among insiders.
The off-ramp is the usual vulnerability; The need to convert proceeds of crime into fiat currencies or stablecoins often requires going through a central platform that applies “Know Your Customer” (KYC) procedures, where anonymous identities are transformed into specific individuals.
South Korean law enforcement has developed this model through past cases; The takedown of a USDT money laundering ring earlier this year, which resulted in 149 arrests, demonstrated prosecutors’ ability to map complex, multi-wallet schemes. Catfi’s use of approximately 10 million won in traceable criminal funds indicates that the digital trail was clear enough to support the accusation.
Investigations resulted in the arrest and indictment of two suspects for market manipulation, and a third was charged without detention, while two other people were charged with helping the main defendant escape. Similar event reconstruction methods were demonstrated in the case of mining the Squid protocol, where a digital trace made it possible to identify the flow of withdrawn funds over several hops.
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