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Ahmed Barakat
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South Korea, the Seoul South District Prosecutor’s Office has arrested and charged the operators behind Catfi. This is the country’s first-ever trial linked to a decentralized exchange.
The case, filed under the Virtual Asset User Protection Law, accuses the group of market manipulation after 256 investors lost 900 million won ($586,000) when liquidity was depleted following an artificial price rise.
The scheme began on Pump.fun in early 2025, where the main suspect, identified by the surname Park, who operates online under the influencer name “Eth Father,” created Catfi before listing it on a decentralized exchange. Park allegedly posed as an unrelated third party to recommend purchases, inflate follower numbers, manage the project’s social accounts, and spread tokens across multiple wallets while using carousel trading to hide the issuer’s control.
Catfi’s price rose 1,001-fold within 26 hours of its release, with 6,000 investors buying before liquidity disappeared. The group used approximately 10 million won in criminal funds and received 400 million won, or $260,000, in proceeds.
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Catfi arrested in South Korea and DeFi regulation
Until this Katfi case, the implementation of virtual assets in South Korea was almost entirely focused on centralized exchanges. Stock exchange fraud occupied a legally murky space: the non-custodial design, pseudonymous portfolio operators, and the absence of a regulated intermediary made it structurally difficult to establish criminal liability under frameworks designed for traditional finance or even stock exchange abuse.
The Virtual Assets User Protection Act, which took effect in July 2024, gave prosecutors a legal basis to cover “Using fraudulent means, schemes or techniques” and false statements about material facts in digital asset trading, regardless of venue.
Catfi’s prosecution is the second known case under the law, following the January 2025 ACE token tampering case on Bithumb, but the first to reach the DEX environment.
Prosecutors in the South Seoul District explicitly worded the enforcement mandate, saying the office would do so “Deal firmly with actions that disrupt the digital asset market and undermine public confidence.”
DeFi regulation in South Korea has now moved from exchange oversight to on-chain conduct, and operators who assumed decentralization meant immunity are reading that statement very carefully at the moment.
Tracking mechanism
The Catfi case illustrates the investigative template that makes on-chain forensics increasingly dangerous for operators of rug pulls. Plaintiffs identified circular trading patterns and coordinated trades across portfolios controlled by the issuing group, creating artificial scale and a compelling concentration of insider ownership.
From there, it’s usually the way out of the way that the point of exposure is: converting criminal proceeds into fiat or stablecoins requires dealing with a central exchange with KYC obligations, and this intersection is where pseudonymous operators become identifiable individuals.
South Korean law enforcement agencies have developed this pattern in previous cases; A USDT laundering ring announced earlier this year that included 149 arrests showed that prosecutors can draw up complex, multi-portfolio schemes on a massive scale. Katfi’s group’s use of approximately 10 million won in traceable criminal funds suggests that the trail on the chain was coherent enough to solidify the indictment.
Two suspects were arrested and charged with market manipulation. One was indicted but not arrested; Two others were accused of helping the main suspect escape. Similar reconstruction methods were visible in Exploiting the SQUID protocolwhere on-chain tracking helped identify the flow of funds drained across multiple hops.
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