Cube Entertainment Co-CEO Accused of Misleading Cryptocurrency Investors

Major K-pop company Cube Entertainment’s co-CEO, Kang Seung-kon, faces accusations of misleading investors into putting money into a local cryptocurrency by falsely guaranteeing returns, according to local news reports.

Kang, 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 Cube’s investment, the price of Nestree cryptocurrency surged nearly ten times, from 5 won to 50 won within a month, as investors expected further collaboration with the major K-pop company.

Alleged victims claimed Kang encouraged investors to commit funds in Nestree cryptocurrency, promising to return their original investment.

On local exchange Bithumb, Nestree peaked at 59 won on March 28, 2022, before falling 34% to 39 won within a month. By the end of 2022, the token’s price plummeted to single digits and is currently trading around 4.9 won.

When investors demanded their principal back after the price drop, Kang allegedly denied making such a promise and suggested alternative cryptocurrency investments to help recoup losses.

Kang denied the accusations, stating he never guaranteed investments in crypto. He asserted that Cube would continue its collaboration with Nestree, deeming their participation in the capital raise part of Cube’s blockchain expansion. Investors in Nestree are reportedly contemplating legal actions against Kang.

The Block has reached out to Cube Entertainment for comment.

Kosdaq-listed Cube Entertainment is a leading company in South Korea’s music industry, reporting revenues of $109 million in the first three quarters of 2024. The company manages K-pop acts including (G)I-DLE and Pentagon.

Cube’s stock on Kosdaq closed down 1.9% at 14,450 won on Friday and has fallen 7.4% year-to-date.

Cube previously collaborated with Animoca Brands to form an NFT-focused joint venture in 2022.