Police Arrests Man in His 20s for 200 Million Won Fraud Using Cat NFT

by Cho Seongpill

Published 27 Apr.2022 18:04(KST)

Seoul Metropolitan Police Agency file photo / Photo by Moon Honam munonam@

[Asia Economy Reporter Seongpil Cho] A man in his 20s has been arrested by the police on charges of fraud after registering NFTs using cat characters on a famous non-fungible token (NFT) marketplace and swindling over 210 million KRW.

The Seoul Metropolitan Police Agency announced on the 27th that Mr. A (26), who conducted an NFT investment scam known as a "rug pull," was detained on fraud charges. A rug pull refers to pulling a rug out from under someone, causing them to fall. In the virtual asset market, it describes a scam where developers abruptly halt a project and abscond with investors' funds.

From November last year to January this year, Mr. A registered 10,000 cat character NFTs on a well-known NFT marketplace and deceived nine victims by promising daily virtual asset payments upon purchase, swindling approximately 210 million KRW. The police began investigating after receiving multiple reports around January from individuals who suffered financial losses due to the unilateral closure of the NFT project's community by the operator.

Mr. A and four accomplices, who met through a virtual asset investment group, planned the crime knowing that creating NFTs is relatively easier than issuing coins. The police also confirmed evidence that they manipulated prices through wash trading to inflate transaction volumes. In fact, the NFTs initially traded at 36,000 KRW surged to a peak price of 500,000 KRW. Mr. A, the mastermind, liquidated his NFTs at high prices just before shutting down the project.

The police are also investigating four accomplices who assisted in the crime by designing the cat characters, planning investments, and handling promotions. A police official advised, "To prevent fraud in NFTs, which are emerging as new investment destinations, do not blindly trust popularity or the number of community members; instead, verify the developer’s background and activity status."