A South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for his detention, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim asserted in a recent staff meeting at Kakao that the allegations against him are false, stating, “I have never instructed or condoned any illegal acts.” Kakao labeled the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to hinder Hybe, another major K-pop entity, from acquiring it. SM Entertainment and Hybe are leading K-pop companies in South Korea, representing popular groups such as Aespa and BTS.
Kakao eventually successfully acquired SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a significant employer, having more than 10,000 staff members in 2020. Kim, once regarded as South Korea’s wealthiest individual with a fortune exceeding $13 billion, owns about a 24% share in the company.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, suggested that this situation could mark Kakao’s “biggest crisis.” He noted that it would now be up to the remaining executives to demonstrate that the company can operate effectively in the absence of its founder.