SEC v. Eric Zhu (rug pulls, 2025)
Settled
Checked against the primary document on October 3, 2026. The library's summary, tags and figures for this record were compared with the regulator's own document by an AI model (Claude) following written instructions, with sampled and disputed records read a second time. No lawyer has reviewed them. A checked record can still contain errors, and checked does not mean endorsed. See how we check records or report a correction.
In January 2025 the SEC charged blockchain engineer Eric Zhu with a rug pull in the Game Coin (GME) token, alleging he kept liquidity-provider tokens unlocked while the issuer told investors liquidity was locked, then withdrew about $553,000 and cut the price roughly 12 percent. Without admitting the allegations he agreed, subject to court approval, to pay $672,992 in disgorgement and interest combined and a $150,000 penalty.
The record
| Agency | SEC |
|---|---|
| Release number | LR-26223 |
| Date filed | 2025-01-16 |
| Date resolved | 2025-01-16 |
| Court | U.S. District Court, Middle District of Louisiana |
| Status | settled |
| Asset class | crypto |
| Criminal parallel | No |
| Defendants | Eric Zhu |
| Cited as charged or alleged | Exchange Act s.10(b) and Rule 10b-5 ; Securities Act s.17(a) |
| Techniques | Rug pulls |
What was ordered
- Civil penalty
- $150k
- Disgorgement
- $673k
- Prejudgment interest
- —
- Total relief
- $823k
- Alleged gain
- $553k
What is alleged to have happened
The Securities and Exchange Commission announced this action on January 16, 2025 as litigation release LR-26223, filing civil action 3:25-cv-00054 in the Middle District of Louisiana. The defendant is Eric Zhu (1 individual, 0 entities).
The complaint alleges that Zhu, hired for coding work on Game Coin, LLC's GME token, ended up with exclusive control of a blockchain address holding liquidity-provider tokens from the token's trading pool. The issuer and its founders told investors in social media posts that liquidity was locked, but Zhu allegedly kept his tokens unlocked and used them to withdraw liquidity and sell into the pool, misappropriating crypto assets worth about $553,000 and lowering GME's price by about 12 percent. The SEC charges Securities Act Sections 17(a)(1) and (3) and Exchange Act Section 10(b) and Rules 10b-5(a) and (c).
Zhu agreed to pay disgorgement and prejudgment interest of $672,992 and a civil penalty of $150,000; the settlement was subject to court approval. The release gives the first two as one combined figure, which the record stores as disgorgement. An earlier version stored the whole combined figure as interest and omitted the penalty.
For the regulator's own account of the facts, read the primary document linked above.
What technique is this, and how does it work?
This action is tagged with one technique in our taxonomy. The tagging is ours: regulators charge statutory provisions, not technique names, so the mapping is an editorial judgement described in our editorial policy.
- Rug pulls — see how it works, what statute it engages, and every other action tagged the same way.
Timeline
- 2025-01-16 Litigation release published
Primary documents
Everything on this page derives from the documents below. Where our summary and the primary document disagree, the primary document is right.