A prominent billionaire and tech entrepreneur from South Korea, Kim Beom-su, was arrested on Tuesday for allegedly engaging in stock price manipulation involving a major K-pop agency during a takeover attempt last year.
Kim, the founder of the technology firm Kakao, has not been formally charged yet, according to reports. The Seoul Southern District Court has issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the arrest as “unfortunate.”
The 58-year-old is alleged to have manipulated the stock of SM Entertainment to impede rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe represent two of South Korea’s leading K-pop acts, Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is a major player in the technology sector, with Kim holding approximately a 24% stake in the company. As of 2020, Kakao employed over 10,000 individuals, and Kim was once considered South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company can thrive without its founder.