First ever cryptocurrency fraud case under new investor protection law

South Korean authorities tracked the suspects for months after the CatFi case was initially dismissed despite early reports and evidence related to the blockchain.

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

The Seoul South District Prosecutor’s Office confirmed in its statement on Wednesday that five individuals are now facing charges in connection with the case, including two main suspects who have been placed in custody and three others who have been charged without detention.

Influencer scams, fake detentions

Investigators He says The group created and launched CatFi in early 2025 through the coin platform Solana meme Pump.fun. It managed to attract investors shortly after its listing, but abandoned the project once enough funds entered the coin. Prosecutors stressed that the case is of legal significance because it is the first time the country’s Virtual Asset User Protection Act has been used to prosecute a rug sweep under fraudulent and unfair trading provisions. Interestingly, it is also the first known prosecution for a cryptocurrency crime carried out through a decentralized exchange, which previously remained largely outside regulation.

According to the findings, the suspects not only relied on token mechanics to generate interest, but allegedly built a misleading promotional ecosystem around the project. One of the defendants reportedly introduced himself online as an independent cryptocurrency influencer, using that identity to drive investment interest toward CatFi. Meanwhile, another dealt with the project’s official communications, where follower numbers were artificially inflated, and advertisements were published claiming fake token locking arrangements meant to suggest stability.

Authorities also allege that the group distributed tokens across multiple wallets and conducted trading activity to conceal its control of supply and to create the appearance of genuine demand in the market. In the hours following the launch, CatFi’s price reportedly skyrocketed, increasing approximately 1,001-fold during 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, which is roughly equivalent to $600,000, while the suspects are believed to have received profits exceeding 400 million won. The scheme initially caught 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 the hack.

The matter was later escalated when the Financial Services Commission referred the matter to prosecutors, eventually leading to a joint investigation involving a dedicated cryptocurrency crimes unit as well as financial and tax authorities, who tracked down the suspects, including one individual who evaded capture for three months using disguises.

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This was followed by the arrest of two suspects on May 11, while the remaining three were arrested later on Wednesday.

User activity rises despite claims

Pump.fun has it Come Under intense scrutiny for enabling widespread speculative token activity on Solana, most newly created memes are linked to scams such as rug sweeps and pump-and-dump schemes. The platform’s ease of token creation and low transaction costs have led to faster trading.

Despite this, the coin launcher platform is a meme appeared As one of the top revenue generating apps for the Solana ecosystem in 2025. In fact, it was one of seven Solana apps that generated over $100 million in revenue during the year.