K-Pop Powerhouse CEO Under Fire

The CEO of K-pop giant Cube Entertainment is under fire after being accused of participating in a crypto investment scam

Kang Seung-gon, the CEO of K-pop giant Cube Entertainment, is facing legal threats over allegations that he used the entertainment company to inflate a cryptocurrency’s value and encouraged people around him to invest in the token, later pivoting and denying any involvement in a crypto scam.

According to a report by local news on Thursday, Kang is accused of using Cube to inflate the price of a cryptocurrency and encouraging people around him to invest in the token in 2022. The report adds that Cube had invested 100 million won (around $67.834) in Nestree Group Media (NMG) by participating in the company’s capital increase in March 2022, securing a 40% stake in the blockchain technology company.

Following the news of Cube’s investment, the price of the company’s cryptocurrency, Nestree (EGG), reportedly increased tenfold in a month. From 5 won (around $0.0034) at the beginning of March, the price rose to about 60 won (around $0.041) by March 28, 2022.

However, the price of Nestree fell 34% the following month and continued to decline, reaching the 5-won mark the following year. At the time of writing, the token is trading at 4.8 won ($0.0033) on Bithumb.

It is worth noting that Nestree Group Media had 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, is still operating but has sold out or discontinued all registered products.

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.

“In early 2022, Mr. Kang encouraged me to invest, saying, ‘I will guarantee the principal, so please trust me,’” one investor claimed, 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.”

The affected investors reportedly 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.”

However, Cube’s CEO has denied the allegations, claiming that neither he nor the company have been involved in a crypto scam.

“There is no evidence that we recommended a cryptocurrency investment under the condition of a principal guarantee,” Kang stated.

He added that Cube’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.”

“I also invested in EGG prior to Cube’s partnership, but I didn't profit from selling at the peak and rather lost money,” Kang concluded.

Despite denying the allegations, the alleged victims are considering legal action against Kang.