South Korean prosecutors announced on May 27, 2026 that they have charged five people over a meme coin rug pull on Solana's Pump.fun launchpad — the first time the country's Virtual Asset User Protection Act has been used to prosecute an alleged rug pull, and the nation's first criminal case against a crypto fraud executed on a decentralized exchange.
The Seoul Southern District Prosecutors' Office said the defendants created a token called CatFi on Pump.fun in February 2025. The token rapidly climbed to a market cap of $8.37 million before collapsing to $12,170 within hours, according to DEX Screener data. Prosecutors attributed the crash to coordinated mass selling by the defendants — the defining mechanics of a rug pull.
The Prosecutors' Office calculated that 256 investors sustained losses of 900 million KRW (approximately $600,000). The defendants pocketed more than 400 million KRW (approximately $267,000) from their selling. Two defendants — those responsible for promoting CatFi on social media — were arrested. Three others who handled the technical side of the operation and helped the arrested pair evade authorities were charged but remain at large.
The case carries legal weight beyond the five defendants. South Korea passed the Virtual Asset User Protection Act as part of a broader overhaul of its crypto regulatory framework. Previous iterations of the law had not been applied to decentralized launchpad activity, and no prior Korean prosecution had targeted a crypto fraud carried out on a DEX. This case changes both facts simultaneously. Nick Vaiman, co-founder of blockchain analytics firm Bubblemaps, told Decrypt the development was "a good move by the Korean government," noting that community-led rug pull investigations had historically gone nowhere absent legal backing: "Now, with the law and real precedent, we hope to see more justice and fewer retail investors getting burned."
The prosecution prompted an ironic coda. After the charges became public, a new group of traders pushed the dormant CatFi token from a market cap of $2,350 to roughly $167,000 — a surge of nearly 6,000% — in an attempt to "unrug" the project and recover value for original holders. A new X account for the token described the sequence bluntly: "Phase 1. Rug. Phase 2. Prosecution. Phase 3. Unrug." The token had not attracted a single buy between August 2025 and the prosecution announcement, per SolScan transaction data. Despite the speculative bounce, CatFi remains 96% below its February 2025 all-time high.
The precedent now sits in front of other jurisdictions watching how far decentralized-platform liability can stretch. South Korea has drawn the line clearly: launching a token on a permissionless DEX launchpad does not insulate organizers from fraud prosecution when coordinated selling inflicts documented losses on retail investors.
Sources: Seoul Southern District Prosecutors' Office press release (https://www.spo.go.kr/site/southseoul/ex/board/List.do?cbIdx=1403); Decrypt reporting (https://decrypt.co/369134/solana-meme-coin-surges-6000-after-creators-arrested-over-rug-pull); DEX Screener on-chain data (https://dexscreener.com/solana/4cdf2c9ospy2dkkuonv7qgl1iunmyujvjhcwzmwvz238); SolScan transaction explorer (https://solscan.io/tx/3WF44Qzy5yo2Hdt2MTaLFQDcFRxhHbkWRh1hngLNQRyA4oUY5Gocuk7F2VYgb7YoxQhfYbptVhoZMkH3Hn7cLJxE)