A billionaire and tech entrepreneur from South Korea was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant out of concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
The 58-year-old businessman is accused of engaging in stock manipulation involving SM Entertainment as part of an effort to block rival K-pop agency Hybe from acquiring it. Both SM Entertainment and Hybe are leading figures in South Korea’s K-Pop industry, with SM representing Aespa and Hybe representing BTS.
Kakao eventually went on to acquire SM Entertainment. Additionally, last year, Kakao’s chief investment officer Bae Jae-hyun faced indictment on stock manipulation accusations.
Kim established Kakao in 2010 in Jeju City and held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. He was once the richest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this situation might represent Kakao’s “biggest crisis.” He emphasized that it will be essential for the remaining leadership at the company to demonstrate its capability to operate effectively without the founder’s presence.