A South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency. The arrest is linked to a deal from last year involving SM Entertainment.
Kim, who founded the technology firm Kakao, has not yet been formally charged. The Seoul Southern District Court issued a warrant for his arrest due to concerns that he might flee the country or destroy evidence, according to reports.
In a staff meeting at Kakao last week, Kim asserted that the allegations against him are false, stating, “I have never instructed or condoned any illegal acts.” Kakao characterized the arrest as “unfortunate.”
The 58-year-old businessman is accused of manipulating the stock of SM Entertainment to hinder a takeover by rival K-pop agency Hybe. SM Entertainment and Hybe are two dominant players in the K-pop industry, associated with popular groups Aespa and BTS, respectively.
Kakao managed to acquire SM Entertainment, and last year, the firm’s chief investment officer, Bae Jae-hyun, was also indicted for stock manipulation.
Founded in 2010 and located in Jeju City, Kakao employs over 10,000 people, and Kim holds approximately a 24% stake in the company. At one time, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s most significant challenge yet, suggesting it will be crucial for remaining staff to demonstrate the company can thrive in the absence of its founder.