A South Korean billionaire and technology entrepreneur was arrested Tuesday on allegations of stock price manipulation involving a prominent K-pop agency during a deal from the previous year.
Kim Beom-su, founder of the tech giant Kakao, has not yet been formally charged. Authorities at the Seoul Southern District Court issued an arrest warrant for his detention amid concerns that he might attempt to flee the country or destroy evidence.
“The allegations are not true. I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao prior to his arrest. The company described the situation as “unfortunate.”
The accusations against Kim, who is 58 years old, involve claims that he manipulated the stock of SM Entertainment during a takeover attempt last year to thwart another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are two of Korea’s leading K-pop firms, representing popular acts such as Aespa and BTS.
Ultimately, Kakao succeeded in acquiring SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, and he retained approximately a 24% stake in the company, which employed over 10,000 people as of 2020. Once the wealthiest individual in South Korea, Kim’s estimated net worth exceeds $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. An academic from Korea University Business School remarked that this incident could represent Kakao’s “biggest crisis,” suggesting it would be crucial for the remaining leadership to demonstrate the company can continue to operate effectively in Kim’s absence.