South Korea Charges Five in First DEX Rug Pull Case

Exposure: Who Is Affected and How

The indictment names five individuals directly tied to the operation. Two primary defendants were detained and formally charged; three others received non-custodial indictments. Two additional people face charges for allegedly helping the principal defendant evade capture.

The Pseudonymous Influencer

Prosecutors allege the primary defendant, identified only as Park, marketed CATFI under the pseudonym Eth Father. He presented himself as an unaffiliated influencer while secretly maintaining direct ties to the issuing organization. The group also controlled CATFI's social media presence, inflating follower counts and publishing misleading project announcements.

Wallet Obfuscation and Wash Trading

Authorities claim the defendants used multiple wallet addresses to conceal their control over the token supply. Circular trading patterns – effectively wash trading – generated misleading market perceptions of organic demand. This behavior is central to the fraud charges under the Virtual Asset User Protection Act.

Legal Framework: The Virtual Asset User Protection Act

South Korea's Virtual Asset User Protection Act took effect in July 2024. It was designed to address market manipulation, insider trading, and fraud across both centralized and decentralized platforms. The CATFI case is the first time prosecutors have applied the law to a DEX-based rug pull.

Why This Case Matters for Enforcement

Previous regulatory actions focused on centralized exchanges and formally listed digital assets. Meme tokens on DEXs operated in a gray area. This prosecution signals that decentralized infrastructure does not shield perpetrators from legal consequences. The case also targets influencer marketing as a vector for fraud – a growing concern as meme token promoters proliferate on social media.