South Korean K-Pop Company CEO Accused of Misleading Investors in Crypto Scandal

South Korea’s Cube Entertainment is facing scrutiny after its CEO, Kang Seung-gon, was accused of allegedly misleading investors into a cryptocurrency investment that resulted in significant financial losses.

Allegations of Misleading Investors

A coalition of investors has accused Kang of promoting Nestree, a cryptocurrency launched by South Korean blockchain firm Nestree Media Group, as a promising investment with guaranteed returns. According to local media outlet The Korea Economic Daily, Kang’s claims were made after Cube Entertainment invested 100 million won ($68,376) in Nestree Media Group in March 2022, triggering a tenfold surge in the cryptocurrency’s price.

Nestree Media Group and its Cryptocurrency

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

However, the token’s value reportedly crashed from a high of 59 won to around 39 won within a month, ultimately plummeting to single digits by the end of 2022. Investors, who had invested as much as 80 million KRW (roughly $54,567) in the cryptocurrency, demanded their principal be returned, but Kang denied ever guaranteeing such returns.

Investor Allegations and Potential Consequences

Further investors alleged that Kang suggested they could recoup their losses by investing in other cryptocurrencies he claimed to be working on listing on domestic exchanges. Kang has dismissed all allegations as baseless, stating that he never advised anyone to invest in Nestree with a guarantee of principal protection.

Investors are reportedly considering legal action against Kang, who could face serious consequences if the allegations are proven true, and his actions might be deemed 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 in the past who were found guilty of such activities. Some notable cases include:

  • Two individuals arrested for allegedly profiting from manipulating the price of the ACE cryptocurrency on Bithumb.
  • An individual market maker charged with market manipulation in July.
  • Four employees of crypto exchange Coinone indicted for alleged market manipulation involving 46 coins during its listing process.

In May 2024, South Korea’s Ministry of Justice established a special task force to monitor and mitigate market manipulation and fraud in the crypto sector.

For more news on the latest developments in the crypto world, visit Global Crypto News.

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