Police allege that in 2019, Bang Si-hyuk misled investors by claiming a public listing for Hybe was not likely while secretly preparing for it. They say he pocketed about 200 billion won ($136 million; £101 million) as a result of the alleged fraudulent trading. The Seoul Metropolitan Police Agency has asked prosecutors to request a court warrant against him, though it remains unclear whether the court will grant it.
The specific evidence police have to support the allegations has not been publicly detailed. Hybe debuted on South Korea's Kospi bourse in October 2020. The case against Bang Si-hyuk is long-running and has seen raids at Hybe's headquarters, some of his assets frozen, and calls for him to step down as company chairman.
BTS had become like a 'tourist attraction... widely recognised and embraced by the global public'.
He has been banned from travelling abroad since August while the investigation is carried out. The timeline for the investigation and potential legal proceedings is uncertain, leaving the impact on Hybe's operations and BTS's activities unclear. Bang Si-hyuk denies the allegations against him.
Under South Korean law, those convicted of making 5 billion won or more in illicit proceeds face between five years in jail and a life sentence. The exact amount of illicit proceeds he is accused of making, beyond the police allegation of about 200 billion won, has not been confirmed. Meanwhile, BTS kicked off a comeback world tour following a hiatus of nearly four years.
The group was initially conceived as a hip-hop crew, but Bang decided to adopt a 'K-pop idol model' after considering 'the business context'.
Industry watchers estimate that Hybe stands to make more than $1 billion from BTS's sold-out world tour. Hybe's shares hit a four-year high when BTS announced their world tour in January, adding over 1 trillion won to its market value. This financial boost comes amid the ongoing legal scrutiny facing its founder.
The investigation into Bang Si-hyuk's alleged fraudulent trading has been ongoing for months, with authorities scrutinizing his actions leading up to Hybe's initial public offering. The police's request for an arrest warrant marks a significant escalation in the case, potentially leading to formal charges. If convicted, Bang Si-hyuk could face severe penalties under South Korean financial crime laws, given the substantial amount of alleged illicit proceeds.
The legal proceedings could also impact Hybe's corporate governance and investor confidence, though the company has continued its operations. BTS's successful world tour has provided a counterbalance, driving significant revenue and stock gains for Hybe during this period of uncertainty.