A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent 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 issued an arrest warrant to ensure his custody, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim addressed the allegations in a staff meeting last week, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old mogul is accused of manipulating the stock of SM Entertainment amid a takeover attempt to thwart Hybe, another leading K-pop agency, from acquiring it.
Both SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular acts Aespa and BTS, respectively. Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, the chief investment officer of Kakao, Bae Jae-hyun, was also indicted for stock manipulation.
Kim founded Kakao in 2010, with its headquarters located in Jeju City. He held roughly a 24% stake in the company, which employed over 10,000 individuals in 2020. At one time, he was considered South Korea’s richest individual, with an estimated fortune exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for remaining team members to demonstrate the company’s resilience in the absence of its founder.