A prominent South Korean billionaire and tech executive was arrested on Tuesday over allegations of stock price manipulation involving a major K-pop agency.
Kim Beom-su, the founder of Kakao, has yet to face formal charges, according to reports. A court in Seoul has issued an arrest warrant amid concerns from prosecutors that he may flee the country or destroy evidence related to the case.
In a recent staff meeting at Kakao, Kim denied the charges, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating SM Entertainment’s stock during a takeover last year while trying to thwart rival K-pop agency Hybe’s attempt to acquire the company. SM Entertainment and Hybe are key players in the K-pop industry, managing popular groups like Aespa and BTS.
Kakao eventually took over SM Entertainment. Last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Founded in 2010, Kakao is based in Jeju City and had a workforce of over 10,000 employees in 2020. Kim held a 24% stake in the company and at one time was South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the importance for the remaining leadership to maintain the company’s operations effectively in Kim’s absence.