SM Entertainment has refuted claims that its artists engaged in illegal activities at an adult entertainment establishment in Japan. The company categorically dismissed rumors of NCT members, Johnny and Haechan, being involved in prostitution and drug use as completely false and warned of legal action against those responsible for spreading these baseless allegations. Similar unfounded rumors regarding other NCT members and Kim Hee-chul of Super Junior were also addressed by the agency, who emphasized their intention to pursue legal action without leniency against the perpetrators. The controversy stemmed from viral rumors circulated by a Japanese netizen, alleging that Kim Hee-chul had visited an adult entertainment establishment in Japan with younger SM artists. However, Kim Hee-chul promptly denied these rumors and assured his fans on the Bubble platform that he had never socialized with younger SM artists outside of the agency. Despite the company's efforts to address the issue, SM Entertainment's shares experienced an 8.18 percent drop in response to the rumors. In summary, SM Entertainment has vehemently rejected the allegations against its artists, vowed to take legal action against those responsible for spreading false rumors, and witnessed a decline in its stock value due to the controversy.