Seungri has avoided jail, for now.
On Tuesday (May 14), despite widespread expectation that a warrant to arrest the former BigBang singer would be granted, a Seoul court turned down the application.
Seungri, and his business partner Yoo In-suk are said to have procured a dozen prostitutes for would-be investors of their businesses in 2015, and embezzling 530 million won (S$612,000) from the Burning Sun club.
The court said there was "room for dispute" over Seungri's alleged embezzlement and that there was little concern that he could destroy evidence, news agency Yonhap reported.
Seungri, who announced his retirement from show business in March as the scandal ballooned, has denied the charges. Yoo, who also avoided arrest on Tuesday, is said to have confessed to some misdeeds.
The judge's decision may come as a surprise for many K-pop followers who have already seen the arrests of artists Jung Joon-young and Park Yoo-chun over taping of women in sex acts and drug use respectively.
Some netizens wondered if Seungri has connections all the way to the top while others debated over whether South Korea has a flawed justice system even as President Moon Jae-in has called for a thorough K-scandal probe.
Still, some netizens noted that Seungri had already suffered the embarrassment of being handcuffed when he was taken to a holding area on Tuesday to await the court's decision.
Meanwhile, the issue of illicit taping of women looks set to stir up more discussions, with the release of a movie called Miss & Mrs Cops, reported Variety.
The plot tracks the efforts of two policewomen to help a victim.
"Cops is not directly related to the recent (K-pop scandal) but similar crimes have always been prevalent (in South Korea)," said actress Ra Mi-ran who stars in the movie.