Bang Si-hyuk Under Investigation for Shocking 400 Billion KRW Fraud: Could Face Life Imprisonment?
According to a report by Korea Economic Daily on May 28, South Korea’s Financial Supervisory Service (FSS) is preparing to refer the case to prosecutors, with potential charges that could lead to life imprisonment under the Capital Markets Act.
Bang Si-hyuk Faces Life Sentence Risk in Alleged HYBE Stock Fraud
At the heart of the controversy is a 400 billion KRW (~290 million USD) deal allegedly orchestrated through misleading communications with early investors.
The FSS claims Bang Si-hyuk falsely assured these investors that HYBE had no plans for a public offering, prompting them to sell their shares to a private equity fund (PEF) reportedly founded by Bang’s associate. In reality, HYBE was already progressing with IPO steps, including signing with EY Korea as a designated IPO auditor in November 2019.
Despite this formal step, Bang is said to have reassured investors that no IPO was in progress while secretly preparing for the listing. The FSS believes this constitutes “fraudulent unfair trading” and has found that Bang reportedly shared 30% of the PEF’s investment profits, pocketing around 400 billion KRW, a detail not disclosed in HYBE’s IPO filings.
HYBE has responded to the allegations, saying:
“All transactions were carried out legally following a thorough legal review.”
HYBE Chairman Under Fire as Authorities Uncover Alleged IPO Manipulation
However, the FSS reportedly holds substantial evidence, including signed contracts and official filings, proving that HYBE was actively preparing for an IPO while misleading select shareholders. These actions, if proven, represent a breach of transparency laws and securities regulations.
According to Article 443 of the Capital Markets Act, if financial gains from fraudulent trading exceed 5 billion KRW (~3.7 million USD), the offender may face life imprisonment or a minimum sentence of five years.
The Seoul Metropolitan Police’s Financial Crime Investigation Unit is also conducting a parallel investigation, signaling the seriousness and symbolic weight of the case. Financial authorities have stated their intent to pursue stern punishment, setting a strong precedent for corporate governance in South Korea’s entertainment and finance sectors.
As one of the most influential figures in K-pop and the architect behind HYBE’s global success, Bang Si-hyuk’s legal battle is expected to send shockwaves through both the entertainment industry and capital markets alike.