A prominent South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court approved an arrest warrant due to concerns that he might flee the country or destroy evidence.
In response to the allegations, Kim stated during a recent meeting at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of tampering with the stock of SM Entertainment during a takeover bid with the intent of hindering rival K-pop agency Hybe from acquiring it.
SM Entertainment and Hybe are two of South Korea’s biggest K-pop firms, representing popular acts such as Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, Bae Jae-hyun, the chief investment officer of Kakao, was also indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao employed over 10,000 individuals as of 2020, and Kim held approximately a 24% stake in the company. At one point, he was the wealthiest person in South Korea, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, suggested that this could represent a significant crisis for Kakao, stating, “It would be the job of those who remain at the company to show that it can run well even with the founder not around.”