Investors Accuse Cube Entertainment CEO of Crypto Fraud
The co-CEO of Cube Entertainment, Kang Seung-kon, is under scrutiny following allegations of involvement in a cryptocurrency investment scam. Kang is accused of using his position and the company’s reputation to deceive investors, resulting in large financial losses.
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Korea Economic Daily reports that in March 2022, Cube Entertainment, whose largest shareholder is Kang, invested 100 million won (around $68,376) in the blockchain tech company Nestree Media Group to secure a 40% stake in the company.
Headquartered in Seoul, Cube Entertainment is well-known for managing popular K-pop artists and groups, producing music, and engaging in various entertainment-related ventures.
The company they invested in, Nestree Media Group, runs an e-commerce platform called ‘Nestree Mall,' which uses its native cryptocurrency, Nestree (EGG), and is also involved in non-fungible tokens (NFTs).
After the investment was announced, Nestree’s price surged from the 5 won ($0.0034) range in February 2022 to 50 won ($0.034). While investors anticipated further growth, the price plummeted in the following months.
Investors who lost money due to the decline claim that Kang Seung-kon actively promoted the asset and encouraged them to buy it.
Speaking to Korea Economic Daily, victims stated that Kang guaranteed returns, and people in the securities industry trusted his assurances, rushing to invest in the cryptocurrency. One investor reported losing over 70 million won from an 80 million won investment made in March 2022.
The victims said they plan to pursue legal action against the CEO.
Kang Seung-kon, however, denies the allegations, calling them baseless. He asserts that he never recommended the cryptocurrency with a guarantee of principal returns. The Cube Entertainment co-CEO added that while he did invest in Nestree, he did not profit from it and, in fact, suffered losses himself.
Nestree, once known for its blockchain-focused messenger service for online communities, was listed on South Korean cryptocurrency exchanges Coinone in August 2019 and Bithumb in April 2020.
However, the messenger service, which was its primary offering, has effectively ceased operations. While its e-commerce platform, ‘Nestree Mall,' is still running, all listed products are either sold out or discontinued.
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