Major K-pop company Cube Entertainment’s co-CEO is facing accusations of misleading investors into putting money in a local cryptocurrency by falsely guaranteeing returns, according to local news reports.
Kang Seung-kon, who is also the largest shareholder of Cube Entertainment, allegedly encouraged acquaintances and colleagues to invest in Nestree, a cryptocurrency from South Korean blockchain firm Nestree Media Group, according to a Thursday report from the Korea Economic Daily. Cube had reportedly invested 100 million Korean won ($68,376) in Nestree Media Group in March 2022 through a capital increase.
Following the news of Cube’s investment in the company, the price of Nestree cryptocurrency surged nearly ten times, from 5 won to 50 won in roughly one month, as investors expected further collaboration with the major K-pop company, according to the report.
Alleged victims claimed that around this time, the Cube CEO encouraged investors to commit funds in Nestree cryptocurrency, guaranteeing that they would have their original investment returned.
On local exchange Bithumb, Nestree peaked at 59 won on March 28, 2022, then fell 34% to 39 won within a month. The token’s price plunged to single digits at the end of 2022, and it's currently trading at around 4.9 won at the time of writing, according to Bithumb.
When Nestree fell in value and investors demanded Kang to return their principal, Kang allegedly denied making such a promise, and reportedly offered information on other cryptocurrency investments, suggesting that it would help recoup their losses.
According to the Korea Economic Daily, Kang denied such accusations, saying that he has never advised others to invest in crypto with such a guarantee. The Cube CEO reportedly said that the K-pop company will continue to work with Nestree, as the participation in the capital raise was part of Cube’s blockchain expansion. Investors in Nestree are reportedly considering legal action against Kang.
The Block has reached out to Cube Entertainment for comment.
Kosdaq-listed Cube Entertainment is one of the largest companies in South Korea’s music industry, reporting revenues of $109 million in the first three quarters of 2024, according to its latest quarterly report. The company currently manages K-pop acts, including (G)I-DLE and Pentagon.
Cube previously collaborated with Animoca Brands to form an NFT-focused joint venture in 2022.
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