K-pop is currently experiencing an unparalleled global surge in popularity, but as the industry reaches these extraordinary heights, significant questions are arising about the adequacy of its business practices and ethical standards. A recent court ruling in South Korea has intensified scrutiny on these issues, highlighting the need for transparency and accountability within the rapidly evolving industry.
On July 22, 2025, the Seoul Southern District Court delivered a significant verdict, finding three former employees of HYBE’s affiliate labels—Source Music, BigHit Music, and Belift Lab—guilty of insider trading. Prosecutors disclosed that these employees sold HYBE stock based on undisclosed information regarding BTS’s upcoming military enlistment, a serious breach of South Korea’s Capital Markets Act that raises questions about ethical behavior in the entertainment sector.
Related Updates on the K-pop Industry
This insider trading case revolves around HYBE’s sharp stock drop on June 14, 2022, following BTS’s announcement via their official YouTube channel that they would be halting group activities to comply with South Korea’s mandatory military service requirements. The shocking news resulted in a near 25% decline in HYBE’s shares on that single day, erasing approximately 1.5 trillion KRW (around $1.5 billion) in market capitalization. Prosecutors revealed that the three employees, still working with HYBE’s subsidiary labels at that time, had access to confidential internal reports regarding the announcement prior to its public release. They allegedly sold their shares preemptively to mitigate their impending financial losses.
Consequently, the court imposed suspended prison sentences on all three former employees involved in this scandal. A former Source Music staff member, referred to as “A,” received a 10-month prison sentence, which was suspended for two years, along with a hefty fine of approximately 231 million KRW (around $168,000 USD). The other two individuals, previously associated with BigHit Music and Belift Lab (identified as “B” and “C”), each faced six months of suspended incarceration for two years, with fines of 51 million KRW (about $37,000 USD) and 65 million KRW (approximately $48,000 USD) respectively. Furthermore, all three were mandated to forfeit the entire profit made from their illicit stock sales.
In its ruling, the court emphasized, “An artist’s activity schedule is highly confidential information that directly influences an entertainment company’s revenue. Misusing that information for personal gain constitutes a severe offense that jeopardizes market integrity and warrants public censure.” This statement underscores the critical importance of ethical conduct in the entertainment business, particularly in relation to sensitive financial matters.
According to a report by Music Business Worldwide, HYBE’s U.S. PR agency, Tag PR, initially asserted on July 24 that “the individuals in question are not employees of HYBE.” However, one day later, on July 25, HYBE’s global communications team in Seoul clarified to Music Business Worldwide that all three individuals were indeed former employees of HYBE’s affiliated labels. The company further stated that “they have all already left their positions” and emphasized that “Chairman Bang Si-hyuk has no personal ties to them,” aiming to distance itself from the scandal.
Related Insights into HYBE’s Challenges
While the fallout from the insider trading scandal continues to capture headlines, HYBE has found itself embroiled in another significant controversy. On July 29, the 4th Bureau of Investigation of the Seoul Regional Tax Office initiated a comprehensive tax audit of the company’s headquarters. This investigation is reportedly scrutinizing allegations that HYBE’s founder and chairman, Bang Si-hyuk, utilized a private fund under his control to acquire shares before the company’s highly anticipated 2019 IPO, subsequently reaping substantial profits once the stock was made available to the public.
Following the recent convictions for insider trading, the public’s focus has now shifted toward Bang Si-hyuk himself. Both ongoing cases raise pressing questions regarding HYBE’s IPO process and the management of sensitive financial information. Observers anticipate that the outcomes of this investigation, along with any potential legal repercussions, will attract considerable attention from the global music and business communities alike, further complicating HYBE’s already tumultuous reputation.
Despite the surrounding controversies and challenges facing HYBE, the K-pop sensation BTS continues to shatter records on the international music stage. As reported by Billboard on July 28, the group’s first official live album, PERMISSION TO DANCE ON STAGE – LIVE, made an impressive debut at No. 10 on the Billboard 200 chart for the week ending August 2. This remarkable achievement signifies BTS’s 16th entry into the Billboard 200, with eight of those albums reaching the top 10, marking a record for any Korean act in history.
Moreover, the solo endeavors of BTS members are flourishing as well. Jin, recently discharged from military service, has launched his inaugural solo fan concert world tour, named the Run Seokjin Tour (#RUNSEOKJIN_EP. TOUR), encompassing 18 performances across 9 cities. Earlier this year, J-Hope completed his debut solo world tour, successfully staging 31 shows in 15 cities, and he is set to headline Lollapalooza Berlin this August, demonstrating the members’ individual talents and growing global appeal.
As the global spotlight on K-pop intensifies, the underlying issues within the industry are becoming increasingly difficult to overlook. For the sustainability of its hard-earned accomplishments, the systems and ethical standards within the industry must evolve alongside its cultural influence. If K-pop aspires to maintain its position as a global powerhouse, it faces a pivotal question: As K-pop continues its expansion, is it genuinely establishing itself on a foundation of integrity and authenticity?
