K-pop giant Cube Entertainment’s CEO under fire for misleading crypto investment guarantees

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The Korean entertainment company, Cube Entertainment, is facing criticism following claims against its CEO, Kang Seung-gon, who is alleged to have deceived investors by persuading them to invest in cryptocurrency, leading to substantial financial setbacks.

A group of financial backers claims that Kang was endorsing the digital currency called Nestree, which was developed by the South Korean blockchain company Nestree Media Group, as a lucrative investment with certain profits, as stated in an article published on January 9th by The Korea Economic Daily.

The tech firm, Nestree Media Group, is known for its specialization in blockchain technology, particularly for messaging apps and online marketplaces that prioritize user communities. Their digital currency, Nestree, became available on prominent South Korean crypto exchanges such as Coinone in August 2019 and Bithumb in April 2020.

Significantly, Cube Entertainment’s CEO made these statements after news broke about their company investing 100 million won ($68,376) in Nestree Media Group through a capital increase in March 2022. This investment led to a dramatic increase of around ten times in the cryptocurrency’s price within just under a month.

Soon after Kang’s remarks, it’s said that the token’s value dropped dramatically. Initially at 59 won, it fell to approximately 39 won within a month, and eventually sunk to single-digit figures by the year-end of 2022.

At approximately the same period, certain investors who allegedly invested up to 80 million KRW ($54,567 equivalent in cryptocurrency) were seeking a refund of their initial investment. However, Kang firmly refuted any claims that he had promised such returns.

Additionally, some investors claimed that Kang had proposed a strategy to them at that point, suggesting they could recover their initial losses by putting money into cryptocurrencies he mentioned were in the process of being listed on local exchanges, which he was supposedly involved with.

As reported by The Korea Economic Daily, Kang firmly denies all accusations and states that he has never recommended anyone to invest in Nestree under the promise of principal security.

Concerning Cube Entertainment’s investment decision, he stated it was made to grow their collection of blockchain-related projects. He also confirmed that their partnership with Nestree Media Group will proceed as initially arranged.

Additionally, Kang openly acknowledged his personal investment in Nestree, yet asserted that he hasn’t gained any profits from this investment.

Reports suggest that investors may take Kang to court due to the potential severity of his situation if the accusations are validated. If found guilty, his actions could be seen as market manipulation according to South Korean legal standards.

South Korea’s crackdown on market manipulation

Regulators in South Korea treat accusations of market manipulation very seriously, as they have previously brought charges against multiple people who were proven to have engaged in such illegal activities.

On January 3rd, representatives from the Seoul Southern District Prosecutors’ Office’s Digital Currency Task Force took into custody two suspects for suspected price manipulation of the ACE cryptocurrency on the Bithumb platform. The duo is believed to have made profits through these illicit activities.

In July, a similar accusation was made against an individual involved in the stock market trade, while four team members from the cryptocurrency platform Coinone faced indictment in May 2023. They are suspected of manipulating market prices for 46 different digital coins during their initial listings.

By May 2024, South Korea’s Ministry of Justice set up a dedicated team to oversee and combat market manipulation and fraud within the cryptocurrency industry.

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2025-01-10 12:54