What HYBE’s Recent Controversies Mean for the K-Pop Business

K-pop is in the midst of its biggest global moment yet, but as the industry scales new heights, questions are emerging about whether its business practices and ethical standards are keeping pace. A recent court ruling in South Korea has brought this issue into sharp focus.

On July 22, 2025, the Seoul Southern District Court found three former employees of HYBE’s affiliate labels, Source Music, BigHit Music and Belift Lab, guilty of insider trading. Prosecutors revealed that the employees sold HYBE stock using undisclosed information about BTS’s forthcoming military enlistment, a move that violated South Korea’s Capital Markets Act.

The case centers on HYBE’s dramatic stock plunge on June 14, 2022, the day BTS announced via their official YouTube channel that they would pause group activities to fulfill South Korea’s mandatory military service requirements. The news sent HYBE’s shares tumbling nearly 25% in a single day, erasing roughly 1.5 trillion KRW (about $1.5 billion) in market value. According to prosecutors, the three employees, who were still on staff at HYBE’s subsidiary labels at the time, had access to internal reports about the announcement before it went public. They allegedly sold their shares in advance to sidestep
the looming financial hit.

As a result, the court handed down suspended prison sentences to all three former employees. A former Source Music staffer (identified as “A”) received a 10-month prison term, suspended for two years, along with a fine of approximately 231 million KRW (around $168,000 USD). The other two, who previously worked at BigHit Music and Belift Lab (“B” and “C”), were each sentenced to six months in prison, also suspended for two years and fined 51 million KRW (about $37,000 USD) and 65 million KRW (about $48,000 USD). In addition, all three were ordered to forfeit the full amount they had profited by avoiding stock losses.

In its ruling, the court stated, “An artist’s activity schedule is highly confidential information that directly impacts an entertainment company’s revenue. Using that information for personal gain is a serious offense that undermines market integrity and deserves public condemnation.”

According to a report by Music Business Worldwide, HYBE’s U.S. PR agency Tag PR initially stated on July 24 that “the individuals in question are not employees of HYBE.” However, on July 25, HYBE’s global communications team in Seoul clarified to MBW that all three individuals were indeed former employees of HYBE’s affiliate labels. The company added that “they have all already left their positions” and that “Chairman Bang Si-hyuk has no personal ties to them.”

Even as the insider trading scandal was still making headlines, HYBE was hit with another major controversy. On July 29, the Seoul Regional Tax Office’s 4th Bureau of Investigation launched a tax audit into the company’s headquarters. The probe is reportedly examining allegations that HYBE founder and chairman Bang Si-hyuk used a private fund he controlled to acquire shares before the company’s 2019 IPO, later securing significant profits once the stock went public.

With three former employees recently convicted of insider trading, public scrutiny has now shifted toward Bang himself, as both cases involve questions surrounding HYBE’s IPO and the handling of sensitive financial information. The results of this investigation and any ensuing legal action are expected to draw intense attention from the global music and business industries alike.

Despite the ongoing controversies surrounding HYBE, BTS continues to break records on the global music stage. According to Billboard’s chart story published on July 28, the group’s first official live album, PERMISSION TO DANCE ON STAGE – LIVE, debuted at No. 10 on the Billboard 200 chart dated Aug. 2. This milestone marks BTS’s 16th album to appear on the Billboard 200, with eight of those releases landing in the top 10, the most for any Korean act.

Meanwhile, the members’ solo careers are thriving. Jin, fresh from his military discharge, has kicked off his first solo fan concert world tour, the Run Seokjin Tour (#RUNSEOKJIN_EP. TOUR), which includes 18 shows across 9 cities. Earlier this year, J-Hope wrapped up his debut solo world tour, performing 31 shows in 15 cities, and he’s set to headline Lollapalooza Berlin this August.

As K-pop’s global spotlight burns brighter than ever, the cracks beneath the surface are becoming harder to ignore. For the industry’s hard-won achievements to endure, its systems and ethical standards must evolve just as quickly as its cultural influence. If K-pop aims to sustain its place as a global powerhouse, it faces a defining question: As K-pop continues to grow, is it truly taking root in honest ground?