HYBE’s recent internal audit by the South Korean National Assembly on October 24, 2024, has stirred significant controversy. During the session, HYBE COO and Belift Lab CEO Kim Tae Ho was questioned about the company’s alleged involvement in the controversial sajaegi practice, involving bulk-buying albums to artificially boost sales.

Denial and Confrontation Over Internal Evidence

During the audit, Kim Tae Ho initially denied any involvement in sajaegi, stating:

“We have never done deals where we buy up albums on the condition of returning them later [in order to push numbers].”

Kim Tae Ho

However, this claim was quickly challenged when a National Assembly member presented an internal HYBE document, dated February 4, 2023, titled “returns proceedings project.” This document directly referenced the company’s handling of returns, which contradicts Kim’s assertion. The Assembly member confronted him with a specific order in the document detailing a minimum order of 70,000 albums on a returnable basis, with a maximum possible purchase of 200,000 albums. This evidence cast doubt on HYBE’s transparency regarding its album sales practices.

Assemblyman: “Then we will show you an internal document. There is an email dated February 4, 2023. If you look here, it clearly states ‘returns proceedings project.”

Kim Tae Ho: “The content you have shown is regarding what I have just mentioned. The albums that were sold in 2023, were returned in 2024, and after reviewing this, in the future we will no longer be using such methods for sales.”

Assemblyman: “Let me show you one more [document]. An additional order of a minimum of 70,000 albums bought on the condition of returns, with the maximum purchase being 200,000. What is this about?”

Kim Tae Ho: “After we received many queries about such things, we have realized that we cannot do this and-”

Assemblyman: “So are you saying that you have been doing this all this while, but right now you’re not?”

Kim Tae Ho: “As I have said previously, this is not our company’s direction. However, we have confirmed that a portion of the staff decided to use this returns method, and in accordance with our company’s rules, we have laid down guidelines to prevent this from happening in the future.”

Although Kim Tae Ho has admitted to some of the staff members using the returns method to push sales after being shown documented evidence, he continued to claim that the company itself does not agree with it and ergo has never tried to conduct sajaegi to push numbers. His contrary words have led to fans believing that he accidentally admitted to the suspicions.

Internal Tensions Over Sales Tactics

The issue has reportedly generated tension within the company, with HYBE making public claims to avoid questionable sales tactics, including bulk-buying albums to inflate first-week sales figures. This practice, known as “advance buying,” involves HYBE allegedly purchasing large quantities of albums from retailers, artificially boosting sales metrics, and then refunding these albums, effectively manipulating weekly chart placements.

The sajaegi controversy isn’t new for HYBE. Min Hee Jin, previously associated with HYBE, alleged that she had refused a suggestion from the company to engage in bulk purchases of NewJeans albums. She also claimed that the “advance buying” method was a strategy used to navigate the legality surrounding sajaegi. This tactic was purportedly meant to keep sales numbers high while avoiding legal scrutiny, with albums eventually sold at fan sign events.

HYBE’s denials have done little to quiet fan speculation that sajaegi may have indeed been part of its album promotion strategies.

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