South Korea's Cube Entertainment is under scrutiny after its CEO, Kang Seung-gon, was accused of misleading investors about a cryptocurrency investment resulting in significant financial losses.

It was created by a coalition of investors accused Kang promoted Nestree, a cryptocurrency launched by South Korean blockchain company Nestree Media Group, as a promising investment with guaranteed returns, according to a Jan. 9 report by local media outlet The Korea Economic Daily.

Nestree Media Group advertises itself as a blockchain-based technology company specializing in community-focused messaging services and e-commerce platforms. Its cryptocurrency, Nestree, has been listed on major South Korean exchanges, including Coinone in August 2019 and Bithumb in April 2020.

Notably, the K-pop CEO made these claims after reports of Cube Entertainment's 100 million won ($68,376) investment in Nestree Media Group through a capital raising in March 2022, which led to a ten-fold rise in the price of the cryptocurrency in Less than a month. .

However, shortly after Kang's comments, the token's value reportedly collapsed from a high of 59 won to around 39 won within a month, eventually falling to single digits by the end of 2022.

Around this time, investors, some of whom were said to have invested as much as 80 million Korean won (about US$54,567) in the cryptocurrency, demanded the return of their capital, but Kang denied ever guaranteeing such returns.

Other investors claimed that at the time, Kang suggested they could recoup their losses by investing in other cryptocurrencies that he claimed he was working on listing on local exchanges.

According to the Korea Economic Daily, Kang denied all the allegations as baseless and said that he had never advised anyone to invest in Nestre while ensuring basic protection.

Regarding Cube Entertainment's investment in the project, he said that it is a step to expand the company's blockchain portfolio and stressed that their cooperation with Nestree Media Group will continue as planned.

Kang also admitted to personally investing in Nestree but claimed he did not benefit from the investment.

Investors are reportedly considering legal action against Kang, who could face serious consequences if the allegations prove true, and his actions may be considered a form of market manipulation under South Korean law.

South Korea's crackdown on market manipulation

South Korean regulators do not take allegations of market manipulation lightly, having charged several individuals who have been convicted of such activities in the past.

On January 3, the Joint Virtual Assets Investigation Team of the South Seoul District Prosecutor's Office Arrested Two people allegedly benefited from the price manipulation of the ACE cryptocurrency on Bithumb.

There were similar accusations forrough against an individual market maker in July, while four employees of cryptocurrency exchange Coinone were indicted in May 2023 on charges of... The alleged one Market manipulation including 46 coins during the listing process.

In May of 2024, the South Korean Ministry of Justice decided A special task force to monitor and mitigate market manipulation and fraud in the cryptocurrency sector.