HYBE Accused of Diverting ADOR’s Funds to Support Gaming Subsidiary, Sparking Controversy

Recent allegations have surfaced suggesting that HYBE Corporation might be transferring funds from its successful subsidiary ADOR to inflate the revenue of another HYBE-owned subsidiary, HYBE IM, which operates in the gaming sector. This has sparked significant backlash and concerns among fans and industry insiders alike.

The Allegations Surrounding the Internal Transaction

The controversy stems from a reported internal transaction between ADOR and HYBE IM during the third quarter of 2024. According to a recent media report, ₩4.20 billion KRW (approximately $3.05 million USD) was transferred between the two companies, with HYBE IM receiving ₩4.10 billion KRW (around $2.98 million USD) from ADOR, while ADOR received just ₩90.0 million KRW (about $65,300 USD) in return.

This imbalance has raised eyebrows, especially given that ADOR’s sales success—largely driven by its star group NewJeans—is believed to have contributed to HYBE IM’s gaming content. However, instead of ADOR being compensated for its intellectual property (IP) in HYBE IM’s game Rhythm Hive, it appears ADOR paid out a substantial sum. Typically, it would be expected for a music label to receive royalties when its artists’ IP is used in a game. The reverse nature of this transaction has led to growing suspicions about HYBE’s motives.

Speculation Over HYBE’s Financial Tactics

There are concerns that this transaction is not in line with standard business practices. Many are questioning whether HYBE is using ADOR’s financial success to prop up HYBE IM, which has been struggling. In fact, HYBE IM recorded an operating loss of ₩19.7 billion KRW (about $14.3 million USD) in the previous year, further fueling speculation that the transfer of funds from ADOR is intended to artificially inflate HYBE IM’s revenue on paper.

A market expert, commenting on the situation, expressed concern over the lack of transparency in such internal financial dealings. They noted that if this pattern continues unchecked, it could have long-term negative consequences, especially in terms of artist settlements. If funds are being shifted within the company to prop up weaker subsidiaries, there could be a reduction in the payouts to artists and stakeholders. The concern was heightened by HYBE’s unwillingness to provide detailed clarification, with a company official stating it was “difficult to confirm specific details regarding internal transaction disclosures.”

Netizens and Industry Reactions

These revelations have triggered a wave of reactions from Korean netizens, many of whom took to popular online platforms like Theqoo to express their outrage and skepticism. Here are some of the comments from users:

• “At this point, who is the one betraying the trust?”
• “Whoa??? They’re thugs.”
• “Wow. So that’s why they tried to kick Min Hee Jin out. To use the money as they pleased. Crazy.”
• “There’s no way they will take just the money away from ADOR.”
• “If that’s the case, then they could have just stayed with one company. What’s the point of having labels?”

These responses reflect growing frustration with what some view as corporate manipulation within the HYBE family of companies. The situation has also reignited discussions about ADOR’s CEO, Min Hee Jin, and whether she has been sidelined in part because of her strong leadership and commitment to ADOR’s autonomy. Some netizens suggest that the controversy could be linked to an attempt to undermine ADOR’s financial independence to benefit HYBE’s broader interests.

The Bigger Picture

While HYBE and ADOR have both stated that the ₩4.20 billion KRW transfer was related to gaming royalties, this explanation has done little to quell doubts within the industry and among the public. The fact that HYBE IM has yet to break even and continues to record losses adds further weight to concerns about the fairness and transparency of these internal dealings.

HYBE’s swift rise to prominence in the K-pop industry, fueled by global groups like BTS and now NewJeans, has often been hailed as a success story. However, this latest controversy sheds light on the potential challenges that arise when multiple subsidiaries with differing fortunes are brought under one corporate umbrella. The lack of transparency in how funds are allocated within the company raises important questions about how HYBE plans to manage these internal conflicts moving forward.

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