HYBE founder and Chair Bang Si-hyuk, once celebrated as the trailblazer of the K-pop industry with the unprecedented success of BTS, now finds himself under intense legal scrutiny, putting the agency’s roughly 12 trillion won ($8.65 billion) market valuation to the test.
According to the allegations, Bang deliberately misled investors in 2019 by suggesting that the public listing of HYBE — then Big Hit Entertainment — would be unlikely, while the company was preparing to go public as planned in the back. He is accused of unfair trading, pocketing roughly half of the 400 billion won generated in proceeds.
Bang, who had remained mostly silent throughout the process, sent an official statement to employees earlier this month, shortly before returning to Korea from the US on Aug. 11.
“Having already provided a detailed explanation regarding the circumstances behind the listing during the previous probe carried out by the financial regulators, I will continue to explain the matter once again in full,” the statement read.
“I expect that this process will help clarify the facts, and I will humbly await the authorities’ decision.”
Critical charges
As President Lee Jae-myung pushes his “one-strike” policy in a declared war against stock manipulation, Bang has emerged as a prime example of its enforcement, with authorities competing to take the lead in pressuring him.
On July 16, the Financial Supervisory Commission, the nation’s top financial regulator, referred the case to prosecutors — the strongest measure the agency can take.
Meanwhile, police have intensified their crackdown, raiding the agency’s headquarters as well as the Korea Exchange. The National Tax Service has also launched a sweeping probe into HYBE, deploying its special bureau that handles large-scale tax evasion cases.
Industry officials note that it is highly unusual for all major state investigative bodies — including the police, financial regulators, prosecutors, and the NTS — to simultaneously target a single company, highlighting the extraordinary scope of the investigation.
Uneasy shareholders
Though still at an early stage, the criminal charges against Bang could trigger upheaval in HYBE’s shareholder structure. In recent years, major investors have steadily pared back their holdings in the K-pop powerhouse amid a series of public setbacks, including its feud with former AFOR CEO and producer Min Hee-jin.
Bang is the largest shareholder of the KOSPI-listed company, holding a 31.57% stake, followed by game developer Netmarble at 9.44%, the National Pension Service at 7.8%, and crypto exchange operator Dunamu at 5.53%.
Although the NPS remains one of HYBE’s largest shareholders, it had trimmed its stake by more than 1 percentage point in June 2024. A month earlier, Netmarble offloaded HYBE shares amounting to 2.6 percentage points.
While the game developer explained the sale as a move to secure liquidity and offset operating losses, industry watchers pointed instead to escalated volatility in Hybe’s valuation, challenged by its dispute with Min.
Dunamu, operator of the country’s largest cryptocurrency exchange Upbit, faces headwinds in its partnership with Hybe as well. While Dunamu and Hybe made reciprocal equity investments in 2021 to collaborate on a non-fungible token business, recent developments have raised concerns about a potential rift in the alliance.
Levvels, a joint venture between the two entities, shut down its signature service Momentica in July, citing losses.
“We issued NFTs using HYBE’s intellectual property, but the craze has cooled, slowing the business down. Levvels is starting over from scratch,” Lee Sirgoo, CEO of Dunamu, said at the shareholders’ meeting held at the end of March, signaling a new direction for the business, which could potentially leave HYBE out of the picture.
Both Dunamu and NPS declined to comment on their stakes in HYBE.
HYBE locked in value trap
HYBE’s market valuation has been on a roller coaster ride. After climbing to a 52-week high of 323,000 won during intraday trading on July 2, its shares began to tumble as concerns over risks involving Bang rose to the surface. Fears of a potential delisting sent the stock plunging about 24% in a month to 246,000 won on July 30.
The massive sell-off, however, soon eased. After touching the dip, the stock quickly rebounded to above 250,000 won in the following days, making a partial recovery to 283,500 won as of Friday’s closing.
Still, the stock price remains well below its initial trading performance. On the first day of the market debut, HYBE’s shares soared to as high as 351,000 won. With the current price unable to reach even the debut price of 270,000 won, concerns over potential undervaluation persist.
Despite the hiccups, local stock analysts are maintaining a “buy” call, citing the company’s long-term growth potential, including the expected return of BTS, growth of its girl group KATSEYE, and planned expansion into the Latin American market.
HYBE posted consolidated revenue of 705.6 billion won between April and July, up 10.2% from the same period last year, while its operating profit rose 29 percent to 65.9 billion won, surpassing market forecasts.
“Although Bang faces criminal allegations, they pertain to him personally rather than his role as HYBE’s CEO, which helps limit the impact on the company,” an analyst from a local brokerage firm said.
