[Exclusive] 'Cube Entertainment' Owner Seung-gon Kang, Allegations of 'Scam Coin'

CEO Kang Encourages Acquaintances to Invest in Cryptocurrency 'Nestri'

Cube Entertainment Invests 100 Million Won in Nestri's Actual Issuer

"Guaranteeing Principal... Changed Words After Price Plummeted" Allegations

CEO Kang Explains "Never Encouraged Investment"

According to the cryptocurrency industry on the 9th, Cube Entertainment, where CEO Kang is the largest shareholder, invested 100 million won in March 2022 by participating in the paid-in capital increase of Nestri Media Group, securing a 40% stake in the company. Nestri Media Group is a company specializing in blockchain technology based on information technology (IT). It operates an e-commerce platform 'Nestri Mall' utilizing the cryptocurrency Nestri and is involved in non-fungible token (NFT) related businesses.

The price of the cryptocurrency Nestri surged after the news that Cube Entertainment participated in the capital increase of Nestri Media Group. In February 2022, Nestri was traded at around 5 won per unit, but after the news of the capital increase, the price jumped to the 50 won range. The collaboration news with Cube Entertainment led to a more than tenfold increase in price within a month.

It is reported that CEO Kang encouraged people around him to invest in Nestri around the time Cube Entertainment participated in the capital increase of Nestri Media Group. An investor, Mr. A, said, "CEO Kang encouraged investment in early 2022, saying 'I will guarantee the principal, trust and buy,'" adding, "Believing in CEO Kang's words, securities industry and Cube Entertainment officials, as well as private lenders, rushed to invest in Nestri." Mr. B, who invested in Nestri along with Mr. A, believed in CEO Kang's words and invested about 80 million won in Nestri in March 2022, but suffered a loss of over 70 million won as the value of Nestri plummeted.

Nestri was listed on the domestic cryptocurrency exchanges Coinone and Bithumb in August 2019 and April 2020, respectively, promoting a messenger service specialized for blockchain-based communities. However, the main business, the messenger, has effectively ceased operations. 'Nestri Mall', which offers discounts based on the amount of Nestri held, has not yet closed, but all registered products are either sold out or sales have been suspended.

Investors who were persuaded by CEO Kang to invest in Nestri demanded that CEO Kang guarantee the principal as promised, but received the response, "I never promised to guarantee the principal." There are also talks that CEO Kang tried to appease them by providing information on other coin investments he was pushing to list on domestic exchanges, saying, "I will help you recover the loss with another coin." Cube Entertainment also announced at the end of last year that it plans to add the coin as a payment method in services operated by an affiliated company.

CEO Kang denied the allegations that he and Cube Entertainment were involved in a 'scam coin', stating, "It is completely unfounded." CEO Kang emphasized, "There was no fact of encouraging cryptocurrency investment with the condition of guaranteeing the principal." He stated, "The participation in Nestri Media Group's paid-in capital increase was an investment conducted as part of Cube Entertainment's expansion into new blockchain businesses, and business collaboration with Nestri will continue in the future." When asked if he had invested in Nestri coins before establishing Nestri Media Group, he replied, "I have invested, but I did not make a profit by selling at a high point, and rather suffered a loss."

Attempts to contact Seong-jae Lee, CEO of Nestri Media Group, were unsuccessful. CEO Lee is identified as the actual issuer of Nestri. Nestri Media Group has an office in Umyeon-dong, Seoul. The office is used as a kind of virtual office, renting the address for business registration purposes.

CEO Kang was the largest shareholder and CEO of LoenK (now Inscobi), a listed company on the stock market. He engaged in smart grid, imported used car distribution, bio, and entertainment businesses through LoenK. After selling the management rights of LoenK, he acquired the management rights of VT (then GMP) with his spouse Johana Cho and others in 2017. In July last year, he sold VT, which had grown by receiving orders from a personal company E&C, and received shares of Cube Entertainment, becoming the largest individual shareholder of Cube Entertainment.

Jong-gwan Park, Reporter (pjk@hankyung.com)