A billionaire tech mogul from South Korea was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a major deal 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 due to concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim asserted, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao referred to the arrest as “unfortunate.”
The 58-year-old is accused of influencing the stock of SM Entertainment amid a takeover attempt last year, allegedly as part of a plan to thwart Hybe, another major K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively. Kakao eventually took over SM Entertainment, and last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted on charges related to stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is headed by Kim, who held approximately a 24% stake and employed over 10,000 people as of 2020. At one time, he was regarded as South Korea’s richest person, with a net worth exceeding $13 billion.
Following news of Kim’s arrest, Kakao’s stock plummeted 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis,” emphasizing that it will be up to remaining company leadership to demonstrate effective management in the absence of the founder.