South Korean authorities have reportedly carried out the country’s first arrest and prosecution related to a decentralized exchange (DEX) rug pull case. According to a report by Digital Asset, prosecutors indicted a criminal group accused of manipulating the price of the Solana-based meme coin CATFI and earning illegal profits of around 400 million Korean won, or approximately US$260,000.

The case has drawn significant attention because investor losses reportedly reached 900 million Korean won and it marks a firm move by South Korean regulators against crypto market manipulation practices in the decentralised finance sector.

Suspects Allegedly Used Fake Influencer Identity

Based on the investigation, the main suspect, identified by the surname Park, allegedly posed as a crypto influencer on social media under the name “Eth Father.” Through the account, he reportedly promoted the CATFI token as if it were an independent project with strong growth potential.

Investigators stated that the promotion was intended to attract retail investors before the group executed a rug pull. In this scheme, developers or parties controlling the token sell off their holdings in large amounts after the price rises, causing the token’s value to crash and leaving investors with heavy losses.

According to reports, 256 investors were affected by the manipulation. Total investor losses are estimated at 900 million Korean won, or around US$585,000.

CATFI itself operates on the Solana network, a blockchain that has become a major hub for meme coins and DEX trading activity in recent years due to its low transaction fees and high-speed performance.

Prosecutors Say the Scheme Involved Deliberate Manipulation and Fraud

South Korean authorities believe the case was not simply a failed crypto project, but a systematically designed market manipulation scheme. Investigators found indications that the suspects intentionally created a false positive image to drive up the token price before dumping their assets.

According to industry analysts, the use of anonymous influencer identities is one of the most common tactics in crypto rug pull schemes. Perpetrators typically build communities and generate hype through social media to convince investors that a project is legitimate.

This legal action also signals that South Korean regulators are expanding oversight of digital asset trading activity on DEX platforms, which have historically been more difficult to regulate compared to centralized exchanges (CEXs).

Since the collapse of the Terra-LUNA ecosystem in 2022, the South Korean government has tightened its regulatory approach toward the digital asset industry, including stronger oversight of market manipulation and retail investor protection.

Impact on the Meme Coin Industry and the DeFi Ecosystem

The CATFI case is expected to increase regulatory pressure on meme coin projects and crypto promotion activities on social media. In recent months, authorities in several countries have begun scrutinizing non-transparent token promotions, especially those involving anonymous influencers.

At the same time, the case serves as a warning to investors about the high risks associated with new DEX token projects that lack transparent teams or proper security audits.

According to several analysts, stronger law enforcement against rug pull cases could help restore market confidence in the long term. However, it may also lead to stricter oversight of the DeFi sector as a whole.

The Solana ecosystem remains one of the largest centers of meme coin activity in the crypto market. High trading volumes and the ease of creating new tokens continue to attract traders, but also create opportunities for speculative projects and scams.

Conclusion

South Korea’s first arrest and prosecution related to a DEX rug pull case marks a new chapter in the country’s digital asset law enforcement efforts. The CATFI case demonstrates that authorities are beginning to treat meme token manipulation and deceptive promotions as serious criminal offenses that can significantly harm retail investors.

Amid the rapid growth of the DeFi and meme coin sectors, the case serves as a reminder that project transparency, team identity, and risk management remain critical factors before investing in high-risk crypto assets.