A billionaire South Korean tech entrepreneur was arrested on Tuesday on allegations of stock price manipulation related to a major K-pop agency during a business deal conducted last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his custody amid concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur faces accusations of manipulating the stock of SM Entertainment during a takeover attempt last year, allegedly to obstruct Hybe, another influential K-pop agency, from acquiring it.
SM Entertainment and Hybe are leading names in the South Korean K-pop industry, representing artists such as Aespa and BTS, respectively. Ultimately, Kakao did acquire SM Entertainment. Last year, Kakao’s chief investment officer was also indicted on unrelated stock manipulation charges.
Kim established Kakao, headquartered in Jeju City, in 2010 and held a roughly 24% share of the company, which employed over 10,000 people by 2020. He was once regarded as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. A professor at Korea University Business School remarked that this incident could represent Kakao’s “biggest crisis.” He noted that it would be crucial for the remaining leadership to demonstrate the company’s ability to function effectively in Kim’s absence.