The offices of HYBE, the agency of K-pop superstars BTS, have been raided by police in connection with allegations of fraud involving its founder Bang Si-hyuk, Yonhap news agency reported.

"The Seoul Police's Financial Crime Investigation Division said it was searching HYBE's headquarters in Seoul," the statement quoted by AFP said.

Bang, the creator of BTS, is under investigation on charges of misleading early investors to extract illegal profits from the company's initial public offering in 2020.

According to local media, he is accused of earning about 200 billion won ($146 million) through this scheme.

HYBE denies that Bang committed any wrongdoing.

"We will clarify that the listing of the shares on the stock exchange was carried out in accordance with all applicable laws and regulations," the company said in early July, promising "active cooperation" with authorities to uncover the case.

Bang is accused of misleading early investors in HYBE who owned shares before the IPO by telling them in 2019 that he had no plans to take the company public.

He then encouraged them to sell their shares to private equity funds, while the IPO plan was actually in the works.

HYBE went public in 2020 after shareholders sold their shares.

The 52-year-old man is accused of secretly striking a deal with the private equity funds to receive a share of the profits from the sale of shares after the IPO.

The investigation comes at a time when all seven members of BTS are completing their mandatory military service and preparing for a comeback next year.

HYBE announced this month that a new album and world tour are planned for 2026.

BTS, known for their support of progressive causes, hold the record for the most listened to group on Spotify and became the first K-pop group to top the Billboard 200 and Billboard Artist 100 charts in the US.

Before their military service, BTS generated more than 5.5 trillion won ($4 billion) in annual economic impact, according to the Korea Culture and Tourism Institute.

That represents about 0.2% of South Korea's total GDP, according to official data.

There was debate over whether BTS should receive exemption from military service — which is sometimes granted to Olympic medalists and classical artists who have won prestigious international awards — but under South Korean law, pop stars do not qualify.

In the absence of public consensus on the issue, the group members enlisted individually at the end of 2022. | BGNES