South Korea is conducting the first Rug Pull operation on a fixed platform

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The Southern District Prosecutor’s Office in Seoul, South Korea, arrested and indicted Catfi’s accomplices, making it the country’s first prosecution of a “rug pull” scam linked to a digital exchange (DEX) platform.

The lawsuit comes from the Virtual Asset User Protection Act, where the group is accused of distorting the market after 256 investors lost about 900 million won (equivalent to $ 586,000), due to the withdrawal of funds following the increase in prices.

A fraudulent scheme began on the Pump.fun platform at the beginning of 2025, with the main opponent, who goes by the nickname “Park” and has a digital power working under the name of “Eth Father,” creating Catfi before being listed on the central exchange. The investigation alleges that Park acted as an unrelated third party to promote the purchase of the funds, uploaded tracking numbers and controlled the project’s social media accounts, distributed the funds to multiple wallets and used circular trading to hide the control of the donor.

Catfi’s stock hit a record high of 1,001 in just 26 hours after its release, attracting nearly 6,000 investors before the stock ran out. The group used 10 million dollars won in lawsuits to carry out the scheme, and made a profit of 400 million dollars, or about $260,000.

Catfi builds and manages the DeFi (DeFi) sector in Korea

Prior to the Catfi case, South Korea’s regulatory efforts focused on centralized platforms. Decentralized exchange (DEX) fraud cases fell into a legal gray area; Due to its non-custodial nature, the use of anonymous wallets, and the lack of a regulated intermediary, it has made it difficult to determine criminal liability under traditional money laundering laws or centralized platforms.

However, the Virtual Asset User Protection Act, which went into effect in July 2024, gave prosecutors a strong legal basis, covering “the use of fraudulent means, schemes or fraudulent means” and making false statements about physical information in the sale of digital assets, regardless of where the sale takes place.

Catfi’s prosecution is the second known case under the law, after the ACE fraud case on the Bithumb platform in January 2025, but it is the first to be spread to developed countries.

Seoul’s critics made it clear what they were supposed to do, stressing that the office would “do things that disrupt the market for digital products and undermine people’s trust.”

South Korea’s DeFi law has now moved away from just monitoring social networks, putting users who think segmentation means enough security to read more carefully.

A way to track criminals

The Catfi case provides an example of research that makes chain law enforcement more vulnerable to Rug Pull users. The prosecutors identified practices of circular trading and laundry controlled by the issuing group, which created fraudulent transactions and concealed the level of ownership among insiders.

The off-ramp is the usual vulnerability; The need to convert criminal money into fiat currencies or stablecoins often requires passing through a central platform that implements “Know Your Buyer” (KYC) processes, where anonymous information is converted to unique individuals.

South Korean law enforcement agencies have done this through previous cases; The bust of the USDT extortion network earlier this year, which led to the arrest of 149 people, demonstrated the ability of hackers to map complex, multi-wallet schemes. Catfi’s use of nearly 10 million won in criminal proceeds shows that the digital data was clear enough to prove the case.

The investigation resulted in two suspects being arrested and charged with market disruption, and a third was charged without jail, while two others were charged with helping the main suspect escape. Similar methods of reconstructing events have been demonstrated in the Squid protocol exploit case, where a digital method helped to identify the flow of money that was removed from multiple hops.

A note South Korea is conducting the first Rug Pull operation on a fixed platform appeared for the first time Cryptonews Arabic.

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