South Korea’s Cube Entertainment is underneath scrutiny after its CEO, Kang Seung-gon, was accused of allegedly deceptive traders right into a cryptocurrency funding that resulted in important monetary losses.
A coalition of traders has accused Kang of selling Nestree, a cryptocurrency launched by South Korean blockchain agency Nestree Media Group, as a promising funding with assured returns, in response to a Jan. 9 report by native media outlet The Korea Financial Each day.
Nestree Media Group marketed itself as a blockchain-based know-how firm specializing in community-focused messenger providers and e-commerce platforms. Its cryptocurrency, Nestree, was listed on main South Korean exchanges, together with Coinone in August 2019 and Bithumb in April 2020.
Notably, the Ok-pop firm’s CEO made these claims following studies of Cube Entertainment’s 100 million received ($68,376) funding in Nestree Media Group via a capital improve in March 2022, which triggered a tenfold surge within the cryptocurrency’s value in lower than a month’s time.
Nonetheless, not lengthy after Kang’s feedback, the token’s worth reportedly crashed from a excessive of 59 received to round 39 received inside a month, finally plummeting to single digits by the tip of 2022.
Round this time, traders, a few of whom reportedly invested as a lot as 80 million KRW (roughly $54,567) within the cryptocurrency, demanded their principal be returned, however Kang denied ever guaranteeing such returns.
Additional traders alleged that on the time, Kang prompt they may recoup their losses by investing in different cryptocurrencies he claimed to be engaged on itemizing on home exchanges.
In line with The Korea Financial Each day, Kang has dismissed all allegations as baseless and mentioned he by no means suggested anybody to spend money on Nestree with a assure of principal safety.
Relating to Cube Entertainment’s funding within the challenge, he mentioned it was a transfer to develop the corporate’s blockchain portfolio and affirmed that their collaboration with Nestree Media Group would proceed as deliberate.
Kang additionally admitted to personally investing in Nestree however claimed he didn’t revenue from the funding.
Traders are reportedly contemplating authorized motion in opposition to Kang, who may face critical penalties if the allegations are confirmed true, and his actions is likely to be deemed a type of market manipulation underneath South Korean legislation.
South Korea’s crackdown on market manipulation
South Korean regulators don’t take allegations of market manipulation frivolously, having charged a number of people prior to now who have been discovered responsible of such actions.
On Jan. 3, the Seoul Southern District Prosecutors’ Workplace’s Digital Asset Joint Investigation Group arrested two people who allegedly profited from manipulating the worth of the ACE cryptocurrency on Bithumb.
Comparable costs have been introduced in opposition to a person market maker in July, whereas 4 workers of crypto trade Coinone have been indicted in Could 2023 for alleged market manipulation involving 46 cash throughout its itemizing course of.
In Could of 2024, South Korea’s Ministry of Justice established a particular process drive to observe and mitigate market manipulation and fraud within the crypto sector.
