Cube Entertainment CEO Kang Seung-gon has been accused of misleading investors regarding the potential of a cryptocurrency investment. Cube Entertainment, a prominent player in South Korea’s music industry and manager of globally recognized K-pop artists like Pentagon, now finds itself embroiled in a scandal. The company, known for its contributions to the global Hallyu wave and ventures into NFTs and blockchain technology, is now facing reputational damage due to these serious allegations.
According to a local report from Hankyung, Kang allegedly encouraged associates and investors to purchase Nestree, a digital token from Nestree Media Group that supposedly guaranteed the safety of their principal investments. Despite Kang’s denial of these claims, his assurances reportedly led to significant financial losses for numerous investors as the token’s value plummeted. As a result, victims are now considering legal action.
The involvement of Cube Entertainment with Nestree began in March 2022 when the company invested 100 million KRW (approximately $68,376) in Nestree Media Group, acquiring a 40% stake through a paid capital increase. This collaboration propelled Nestree’s cryptocurrency to great heights, with its price soaring from 5 won to 50 won within a month. Kang allegedly leveraged Cube Entertainment’s influence to encourage investment in Nestree, guaranteeing principal protection to potential investors. Affected individuals, including securities industry professionals, Cube Entertainment affiliates, and private loan lenders, claim that they were attracted to invest based on Kang’s promises. One investor, Person B, disclosed investing 80 million KRW ($54,567) but saw their holdings decrease by more than 70 million KRW as the token’s value plummeted by the end of 2022. Nestree’s decline was rapid, with the token’s price dropping to single digits within months, and its ecosystem suffering from inactivity. Currently, the token ($EGG) is valued as low as $0.0029 from an all-time high of $0.042 in April 2022. While Nestree Mall, its e-commerce platform, remains operational, most listed products are either sold out or discontinued. Investors who demanded Kang to honor his alleged guarantees were met with denials, and Kang reportedly tried to steer them towards other cryptocurrency opportunities to recover their losses.
The accusations against Kang carry severe legal and regulatory implications under South Korea’s strict financial and market manipulation laws, including potential imprisonment, significant monetary fines, and a ban on corporate governance. Kang has firmly denied the allegations, stating that he never guaranteed investment returns. These allegations threaten to tarnish Cube Entertainment’s legacy, as the company’s stock has already experienced a 1.9% decline on January 9, 2025. Moreover, South Korea’s regulatory landscape has become increasingly vigilant, with the Ministry of Justice establishing a specialized task force in 2024 to combat fraud and manipulation in the crypto sector. There are also reports suggesting that regulators are considering reviewing the plan to allow companies to buy crypto this year.
