- South Korean prosecutors charge 5 people in CATFI memecoin rug withdrawal case.
- About 256 investors lost nearly $650,000 after the CATFI token crash.
- CATFI token rose 1000x before liquidity was drained and the price collapsed.
South Korean prosecutors have arrested and charged a group of individuals associated with the Solana-based CATFI memecoin, over an alleged decentralized exchange (DEX) rug sweep.
This case represents the country’s first formal criminal action targeting a memecoin scam that unfolded entirely through a decentralized trading environment.
according to Local news outletAuthorities say the operation affected hundreds of individual investors and generated large illicit gains before collapsing after a rapid rise in prices and the drain of liquidity.
How the CATFI memecoin scheme was exposed
CATFI token was launched in Solana It is mainly traded through decentralized platforms, including Pump.fun.
Investigators allege that the operators positioned the token as a high-potential MemoCoin and used aggressive online promotion to attract early buyers.
One of the main figures in the campaign reportedly used the pseudonym “Eth Father,” presenting himself as a credible community leader.
This identity was used across social channels to build trust and encourage early participation in the token.
Once liquidity and trading activity increased, prosecutors say the operators engaged in coordinated trading behavior designed to mimic organic demand.
This included portfolio splitting and washed-out trading patterns that created the appearance of active interest in the market.
At its peak, CATFI saw a significant rise, reportedly increasing its value more than 1,000 times over a short period.
This rapid rise was followed by a sudden collapse after the withdrawal of liquidity and the sale of large holdings, a structure consistent with what the authorities describe as a classic rug-pulling process.
Arrests, charges and financial impact
The Virtual Asset Crimes Unit of the Seoul South District Prosecutor’s Office led the investigation.
Officials confirmed that two main suspects have been arrested, while five individuals have been charged in connection with the scheme.
Other suspects are also being investigated for allegedly helping key figures avoid arrest during the investigation.
The case is being prosecuted under South Korea’s Virtual Asset User Protection Act, which was recently introduced to address fraud and manipulation in the digital asset market.
Authorities estimate that about 256 investors were directly affected by the collapse of CATFI.
Total losses were reported at approximately 900 million won, or approximately US$650,000 based on prevailing exchange rates.
Investigators also identified approximately 400 million won, or about US$260,000, in illicit profits linked to the scheme.
The investigation indicates that operators extracted value through early liquidity positions and coordinated sell-offs, leaving late participants vulnerable to a sharp price reversal.
Why this case is important for cryptocurrency enforcement in South Korea
This is the first known case in South Korea where prosecutors have pursued criminal charges specifically related to the DEX-based memecoin rip-off.
Unlike previous enforcement actions that focused primarily on centralized exchanges or organized investment fraud, this case extends the scope of legal scrutiny directly to decentralized trading environments.
The prosecution explained that the use of Decentralized platforms It does not protect individuals from criminal liability.
By applying the Virtual Assets User Protection Act to on-chain activity, authorities indicate that token creators and promoters can be held accountable even in the absence of a central intermediary.
The CATFI memecoin case also highlights how quickly memecoin ecosystems can magnify gains and losses.
The token’s reported 1,000x rally attracted a large number of retail traders, but the subsequent crash wiped out those gains almost immediately after liquidity was removed.
With 256 confirmed victims and losses running into hundreds of millions of won, regulators appear to be treating the incident as more than just a simple market failure.
Instead, it is positioned as an orchestrated financial scam built on symbolic manipulation and misleading promotion.
The outcome of this case will likely impact how future memecoin projects are launched and monitored in South Korea.
Prosecutors are now tracking wallet activity, promotional networks, and liquidity movements associated with the launch of tokens on decentralized exchanges.
