First-Ever Case of Crypto Fraud Under New Investor Protection Law

South Korean authorities tracked the suspects for months after the initial dismissal of the CatFi case, despite initial reports and evidence from blockchain detectives.

South Korean prosecutors have filed charges against a group of individuals linked to a Solana-based coin project called CatFi, following allegations that the token was used in a coordinated rugpull scheme after attracting funds from investors.

The Seoul Southern District Prosecutor’s Office confirmed in its Wednesday statement that five people are now facing charges in connection with the case, including two main suspects who were taken into custody and three others who were charged without detention.

Ruse of influencers, false blocks

Investigators say the group created and launched CatFi in early 2025 through the Solana coin platform Pump.fun. It managed to attract investors shortly after listing, only to abandon the project once enough money flowed into the token. Prosecutors stressed that the case is legally significant because it is the first time the country’s Virtual Asset User Protection Act has been used to prosecute a sniper under fraudulent and unfair trade provisions. Interestingly, this is also the first known prosecution involving a crypto crime conducted via a decentralized exchange, which had previously remained largely outside regulatory reach.

According to the findings, the suspects did not rely solely on symbolic mechanisms to generate interest, but allegedly built a deceptive promotional ecosystem around the project. One of the defendants allegedly presented himself online as an independent crypto influencer, using this identity to generate investor interest in CatFi. Meanwhile, another handled official project communications, where follower counts were artificially inflated, and announcements were published claiming false token locking arrangements intended to suggest stability.

Authorities further claim that the group circulated tokens across multiple wallets and conducted fictitious trading activities to conceal its control over supply and create the appearance of genuine market demand. In the hours following the launch, CatFi’s price reportedly soared dramatically, increasing approximately 1,001 times over a 26-hour window, during which approximately 6,000 investors purchased the token.

Prosecutors said 256 of those investors later reported total losses amounting to about 900 million Korean won, roughly equivalent to $600,000, while the suspects allegedly made profits of more than 400 million won. The project 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 they were victims of hacking.

The case then escalated when the Financial Services Commission referred it to prosecutors, ultimately leading to a joint investigation involving a dedicated crypto-crime unit as well as financial and tax authorities, who tracked down the suspects, including an individual who had evaded capture for three months using disguises.

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Arrests followed on May 11 for two suspects, while the other three were arrested later on Wednesday.

High user activity despite claims

Pump.fun has come under scrutiny for enabling large-scale speculative token activity on Solana, where most newly minted meme coins are linked to scams such as rug pulls and pump and dump schemes. The platform’s ease of token creation and low transaction costs enabled rapid trading.

Despite this, the coin launchpad became one of the highest revenue-generating applications in the Solana ecosystem in 2025. In fact, it was one of seven Solana applications that generated over $100 million in revenue during the year.