HYBE founder and president Bang Si-hyuk faces arrest after South Korean police requested a detention warrant for charges that he orchestrated a fraudulent pre-IPO trading scheme that generated about 190 billion won (about $129 million) in illicit profits tied to the K-pop agency’s stock market debut.
South Korea’s financial crimes unit at the Seoul Metropolitan Police Agency has asked a court to issue a detention warrant for Bang on charges of violating the Capital Markets Act, putting his leadership of HYBE under intense scrutiny.
Investigators allege that, prior to HYBE’s initial public offering in 2020, HYBE engaged in fraudulent and unfair business activities designed to secure illegal gains of tens of millions of dollars. A judge is expected to review the request and decide whether to grant the warrant, a decision that could lead to his arrest and remand in custody, according to the BBC.
Potential arrest of Bang Si-hyuk
Authorities say the alleged scheme began in 2019, when Bang is accused of misleading early HYBE investors by saying the company had no plans to go public. Based on these assurances, some shareholders would have sold their shares to a private equity fund or to an ad hoc company linked to Bang and his associates.
At the same time, HYBE was said to be taking key steps toward an IPO, including moves such as the appointment of an external auditor, which investigators said made the “no listing” statement misleading.
After HYBE’s IPO in 2020, the fund reportedly sold the shares at much higher prices, generating profits estimated at about 190 billion won, or $129 million, of which Bang would receive about 30% of the earnings, Tribune reported.
South Korea’s financial watchdog had already referred Bang to prosecutors over similar charges of fraudulent stock trading related to the IPO, one of the most serious measures it can take.
The referral followed a lengthy capital markets investigation and multiple subpoenas as authorities examined whether insiders were using the facility to evade post-IPO lock-up rules intended to limit early share sales.
Bang has denied any wrongdoing, arguing through his lawyers that the profits reflected legitimate investment risk and that other investors also benefited from the trades.
HYBE, citing his legal team, said he regrets the decision to seek a detention warrant, stressed that Bang has cooperated with investigators and is committed to following legal procedures as the case progresses, as per NBC News.
The investigation has drawn global attention because HYBE manages BTS and other major K-pop groups, leaving fans and investors watching closely to see whether the court will approve the warrant and how any arrest could affect the company’s leadership and stock performance.
