Seoul: The National Tax Service (NTS) has initiated a tax investigation into K-pop giant Hybe over alleged fraudulent securities transactions related to the company's initial public offering (IPO), according to industry sources.

According to Yonhap News Agency, the NTS dispatched an investigative team to Hybe's headquarters in Seoul's Yongsan district earlier in the day to seize documents and materials related to the allegations. Hybe is known for managing global acts like BTS and Seventeen.

Hybe is also under investigation by the Securities and Futures Commission under the Financial Services Commission. The probe centers around allegations that its chairman, Bang Si-hyuk, engaged in unfair trading practices. Bang is accused of misleading investors, including venture capital firms, in 2019 by claiming that Hybe's IPO would be delayed. This reportedly induced investors to sell their shares to a special purpose company (SPC) established by a private equity fund backed by Hybe executives.

Authorities suspect that Hybe was already preparing for its IPO at the time, contradicting the information conveyed to investors. After Hybe went public, the SPC sold its shares, and Bang allegedly received 30 percent of the profit from the sale under a prior shareholder agreement.

Tax authorities are expected to scrutinize whether Hybe engaged in any tax evasion during this process.