The CEO of K-pop giant Cube Entertainment is under fire after being accused of participating in a crypto investment scam. He is suspected of allegedly using the entertainment company to inflate the price of the alleged scam token and now risks legal action.
K-Pop Powerhouse CEO Under Fire
On Thursday, local news reported that Kang Seung-gon, CEO of Cube Entertainment, was accused of participating in a crypto scheme In 2022. Kang, who is the company’s majority shareholder, allegedly used the K-pop powerhouse to inflate a cryptocurrency’s value and encouraged people around him to invest in the token.
In March 2022, Cube invested 100 million won, worth around $67.834, in Nestree Group Media (NMG) by participating in the company’s capital increase. As a result, Cube reportedly secured a 40% stake in the blockchain technology company.
According to the report, the price of the company’s cryptocurrency, Nestree (EGG), increased tenfold in a month after Cube’s investment news. The token’s price jumped from 5 won, worth around $0.0034, to about 60 won, worth around $0.041, by March 28, 2022.
However, Nestree’s price plunged 34% the next month and continued its freefall to the 5-won mark the following year. As of this writing, the token trades at 4.8 won, or $0.0033, on Bithumb.
Nestree (EGG) price action over the years: Source: Bithumb
It’s worth noting that Nestree Group Media listed its token on South Korean exchanges Coinone and Bithumb between August 2019 and April 2020, “claiming to be a messenger service specialized for blockchain-based communities.”
According to the report, the company’s main business has been “virtually shut down.” Meanwhile, Nestree Mall, the company’s reward-based shopping mall for the crypto market, hasn’t been shut down but has sold out or discontinued all registered products.
Kang Denies Crypto Scam Involvement
Kang is accused of using his influence to encourage acquaintances and associates to acquire Nestree’s token before and after Cube’s investment in the company, allegedly guaranteeing the return on the initial investment.
An investor claims that “In early 2022, Mr. Kang encouraged me to invest, saying, ‘I will guarantee the principal, so please trust me,’” adding that, “Believing his words, securities firms, Cube Entertainment officials, and loan sharks rushed to invest in Nestree.”
Another investor alleged they “believed Mr. Kang’s words and invested about 80 million won in Nestree in March 2022, but lost over 70 million won when the value of Nestree plummeted.”
Reportedly, the affected investors asked the CEO to “guarantee their principal as promised” but were told Kang never promised such a thing. Instead, some investors allegedly received new investment suggestions from Kang and the promise to “help them make up for their losses with other coins.”
Nonetheless, Cube’s CEO has denied the allegations, claiming that neither he nor the company have been involved in a crypto scam. He emphasized that “there is no evidence that we recommended a cryptocurrency investment under the condition of a principal guarantee.”
Kang added that the K-pop company’s investment in Nestree Group Media was “part of Cube Entertainment’s expansion into the new blockchain business, and we plan to continue our business collaboration with Nestree.” He concluded his response by affirming that, despite investing in EGG before Cube’s partnership, he “didn’t profit from selling at the peak but rather lost money.”
Despite denying the allegations, the alleged victims are considering legal action against Kang.
Total crypto market capitalization is at $3.24 trillion. Source: TOTAL on TradingView
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