![\"The](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/10\/84dd433d-8d72-4b66-962f-291dfdb2dab2.jpg\")
<\/p>\nBang Si-hyuk, the founder and chairman of HYBE sometimes dubbed the \u201cfather of K-pop,\u201d is facing what could be his greatest crisis yet, as police, prosecutors and financial authorities investigate him for alleged fraudulent trading under the Capital Markets Act.<\/p>\n
At the heart of the probe is whether Bang concealed HYBE\u2019s initial public offering (IPO) plans from existing shareholders and reaped illicit profits by using a private equity fund tied to a close associate. <\/p>\n
The fund allegedly earned more than 100 billion won ($73 million) in gains around the time HYBE \u2014 then Big Hit Entertainment \u2014 went public in October 2020.<\/p>\n
Authorities suspect Bang misled early investors into selling their stakes cheaply before the IPO, while HYBE maintains the profit was a result of \u201cbusiness judgment and luck,\u201d not deception.<\/p>\n
Whether IPO plans were hidden from investors<\/p>\n
Bang first mentioned the possibility of taking the company public in 2017, telling Bloomberg at the time that he was \u201cdiscussing an IPO with early investors such as Legend Holdings and LB Investment.\u201d <\/p>\n
HYBE began its formal listing preparations in 2019, applying for a designated audit that August and selecting underwriters in January 2020. A designated audit refers to a system in which a company asks the Financial Supervisory Service (FSS) to appoint an external auditor rather than selecting one on its own. <\/p>\n
Based on the audit results, HYBE filed for a preliminary listing review in May 2020 and successfully debuted on the KOSPI that October.<\/p>\n
Controversy arose because some existing shareholders sold their HYBE shares during this period to Stick Investment and Eastone Equity Partners for around 30,000 to 40,000 won each. <\/p>\n
Just a year later, the IPO price was set at 135,000 won \u2014 roughly one-quarter of the public offering price and one-eighth of the first-day closing price of 258,000 won.<\/p>\n
Police and financial regulators differ from HYBE over the meaning of the \u201cdesignated audit application.\u201d Investigators believe that HYBE\u2019s letter to shareholders at the time \u2014 assuring them there were \u201cno immediate plans for an IPO\u201d \u2014 constituted active deception. <\/p>\n
They argue that applying for a designated audit is a clear signal that a company has entered the listing process, making it hard to accept HYBE\u2019s claim that attracting overseas investors was its top priority instead.<\/p>\n
HYBE, however, argues that it was still exploring multiple funding options, including attracting overseas investment, particularly from Japan\u2019s SoftBank Ventures. The company said the IPO plan was only confirmed later due to market changes and investment shortfalls.<\/p>\n
HYBE also said that revealing IPO intentions too early could have misled investors and that early shareholders were aware of the audit request process.<\/p>\n
<\/p>\n
The headquarters of HYBE, the agency of K-pop supergroup BTS, in Yongsan District, Seoul \/ Yonhap<\/p>\n
Dispute over \u2018planned fund\u2019 vs. \u2018last-minute rescue investor\u2019<\/p>\n
Another key point of contention is that Eastone Equity Partners \u2014 the fund that purchased shares from HYBE\u2019s existing investors \u2014 was established by Kim Joong-dong, a longtime acquaintance of Bang.<\/p>\n
Police suspect Bang recruited Kim to set up a so-called \u201cspecially arranged fund\u201d that secretly bought shares from early shareholders. Kim, formerly of SV Investment, was one of the early backers of HYBE in 2011 and later served as an outside director at the company. He then joined the newly founded Eastone Equity Partners, helping to form the fund and oversee the purchase of HYBE shares.<\/p>\n
Share transactions among investors took place over roughly 2 years \u2014 beginning in October 2018, when Stick Investment acquired shares from LB Investment, and continuing through November 2019, when funds managed by Eastone Equity Partners and New Main Equity bought an additional 8.7 percent stake from existing shareholders.<\/p>\n
HYBE, however, insists that the transactions were not designed for Bang\u2019s personal gain but were rather a \u201clast-resort rescue investment\u201d he managed to secure amid unfavorable market conditions. According to the company, early shareholders had already expressed their intention to sell, and Bang sought buyers to stabilize the firm\u2019s ownership.<\/p>\n
At the time, HYBE\u2019s heavy dependence on BTS revenue and uncertainties surrounding the members\u2019 military service had deterred other investors. <\/p>\n
The company says two U.S.-based private equity firms and one Japanese investor conducted due diligence but ultimately withdrew. It was then that Bang turned to Kim and his associates \u2014 longtime investors familiar with HYBE\u2019s vision and the entertainment industry \u2014 to step in as financiers.<\/p>\n
Profit-sharing deal under scrutiny<\/p>\n
Investigators are also examining a shareholders\u2019 agreement under which Bang reportedly received 30 percent of Eastone\u2019s profits after the IPO \u2014 estimated at around 120 billion won. <\/p>\n
Police believe Bang used this indirect structure to bypass a lock-up restriction that prevented him from immediately selling his own shares.<\/p>\n
HYBE counters that the arrangement was a high-risk, high-return deal proposed by the fund to offset potential losses if the IPO failed. <\/p>\n
Bang would have been obligated to repurchase the shares at a higher price under a put option, the company said, insisting the actual windfall resulted from unforeseen circumstances \u2014 notably the global success of the 2020 BTS hit song \u201cDynamite\u201d and a liquidity surge during the pandemic.<\/p>\n
While HYBE argues the value jump from 2 trillion won to 3.8 trillion won was largely “unpredictable,” police contend that by 2019 BTS was already a global phenomenon, and Bang could reasonably foresee that the group\u2019s upcoming releases would boost HYBE\u2019s market appeal.<\/p>\n
![\"BTS](\"https:\/\/www.newsbeep.com\/au\/wp-content\/uploads\/2025\/10\/89a98f30-3244-4d6a-b5f7-e012547e973b.jpg\")
<\/p>\n
BTS members stand on stage at Kyung Hee University\u2019s Peace Hall in Seoul, March 12, 2021. Courtesy of BigHit Music<\/p>\n
Omission from filings and next steps<\/p>\n
The FSS concluded that Bang\u2019s profit-sharing deal should have been disclosed in HYBE\u2019s securities registration statement, viewing the omission as \u201cfraudulent trading\u201d that harmed earlier investors. <\/p>\n
HYBE maintains the omission was not intentional, noting that the agreement was provided to its underwriter and that disclosure requirements for such contracts were not in effect at the time.<\/p>\n
The company also says previous shareholders made substantial profits before the IPO and that HYBE\u2019s stock price has never fallen below the offering price, meaning no retail investors incurred losses.<\/p>\n
The Financial Services Commission\u2019s Securities and Futures Commission has referred the case to prosecutors after finding sufficient grounds for charges. Police, meanwhile, have searched HYBE\u2019s offices, questioned Bang twice and imposed a travel ban \u2014 signaling that the case is nearing a decisive phase.<\/p>\n
Whether the court sees Bang\u2019s timing as opportunistic foresight or legitimate business acumen \u2014 particularly regarding when the success of BTS became \u201cpredictable\u201d \u2014 will likely determine his fate.<\/p>\n
This article from the Hankook Ilbo, the sister publication of The Korea Times, is translated by generative AI and edited by The Korea Times.<\/p>\n","protected":false},"excerpt":{"rendered":"Bang Si-hyuk, the founder and chairman of HYBE sometimes dubbed the \u201cfather of K-pop,\u201d is facing what could…\n","protected":false},"author":2,"featured_media":209404,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[28],"tags":[64,63,134,136],"class_list":["post-209403","post","type-post","status-publish","format-standard","has-post-thumbnail","category-music","tag-au","tag-australia","tag-entertainment","tag-music"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/209403","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=209403"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/209403\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/209404"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=209403"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=209403"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=209403"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}