Hailey Bieber’s skincare empire, Rhode, just made beauty history—but behind the billion-dollar headlines, there’s a storm brewing. While the ink is still drying on e.l.f. Beauty’s jaw-dropping $1 billion acquisition of Rhode, shocking developments behind the scenes are raising eyebrows and threatening to unravel the carefully polished success story.

According to exclusive sources close to the transaction, legal teams at e.l.f. uncovered a buried file in Rhode’s due diligence folder—and what they found has now set off a series of emergency meetings, internal audits, and an unexpected pause in the brand’s global rollout plans.

“The file wasn’t part of the original document stack,” one insider revealed. “It was tucked away in a secondary folder marked ‘ARCHIVED—NOT FINAL,’ but someone flagged it just before closing. Once it hit the desk of e.l.f.’s general counsel, everything changed.”

The contents of the file remain sealed, but three sources confirmed it included correspondence tied to an early 2023 investor dispute—one that allegedly involved unregistered capital injections, ownership percentage confusion, and a confidentiality clause that may have been violated.

“It’s not illegal per se,” one legal analyst close to the beauty industry said, “but it’s messy. If there were verbal agreements or handshake deals that weren’t disclosed, that can create long-term legal vulnerabilities.”

Even more concerning, the file reportedly contains email threads referencing “outside influence” over product formulation and branding decisions, hinting at the possible involvement of an unnamed celebrity figure who was never publicly linked to Rhode.

Speculation has exploded online.

“Are we talking about Justin [Bieber]?” one beauty insider asked. “Or was someone else behind the curtain pulling strings during product development? If so, that opens up a new layer of IP and partnership complications.”

Rhode, launched in 2022 with just 10 products, experienced a meteoric rise—reaching $212 million in net sales by March 31, 2025. With its cult-favorite lip treatments and minimalist aesthetic, it became the No. 1 skincare brand in Earned Media Value in 2024, with an explosive 367% year-over-year growth.

e.l.f. Beauty, fresh off its 2023 acquisition of Naturium, saw Rhode as the perfect expansion into luxury-adjacent skincare with celebrity star power. The deal included $600 million in cash, $200 million in stock, and a potential $200 million earnout over three years—with Hailey staying on as Chief Creative Officer and Head of Innovation.

But now? That expansion may face unexpected hurdles.

“What e.l.f. is worried about isn’t just the PR,” another source explained. “It’s regulatory exposure. If there’s even a hint that intellectual property or ownership stakes weren’t cleanly managed, international licensing partners may start pulling back.”

There’s also the issue of potential lawsuits. If any early contributors or silent backers to Rhode feel they were excluded or misrepresented in the acquisition process, legal claims could follow—and could delay product launches in European and Asian markets.

Hailey, for her part, has not publicly commented on the new revelations. In a short post on Instagram following the acquisition announcement, she thanked her team and fans, writing: “So grateful for everyone who’s believed in this journey. We’re just getting started.”

But behind the scenes, her legal team is reportedly scrambling.

“This is not a career-ender,” one celebrity brand strategist said. “But it’s a credibility test. Hailey has built a brand on transparency, simplicity, and elegance. If it turns out Rhode was more complicated behind the scenes, it could damage that image.”

Others are being more blunt.

“If this goes sideways, the headlines won’t be ‘Hailey Bieber built a billion-dollar brand.’ They’ll be: ‘Did Hailey know?’”

At e.l.f., executives are said to be working overtime to contain the damage. Internal meetings have been held daily since the discovery, and some sources suggest the earnout portion of the deal may now be tied to an internal compliance review.

“There’s no indication yet that the deal will collapse,” said one M&A attorney familiar with the situation. “But one thing’s for sure: they’re not launching in Japan or Korea until this is resolved.”

For now, the world watches as Hailey Bieber’s billion-dollar dream teeters between industry domination and corporate entanglement. The stakes couldn’t be higher—not just for her, but for the growing list of celebrity entrepreneurs hoping to follow her footsteps.

What was in those legal files? Who was involved? And could this be the first real crack in the Rhode empire?

Stay tuned—this story is far from over.