A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year. Kim Beom-su, the founder of the technology company Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
In a staff meeting at Kakao last week, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company characterized the arrest as “unfortunate.”
Kim, who is 58 years old, is accused of manipulating SM Entertainment’s stock during a takeover attempt last year aimed at thwarting Hybe, another major K-pop agency, from acquiring it. SM Entertainment and Hybe represent some of the biggest names in K-pop, including Aespa and BTS, respectively.
Kakao successfully acquired SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Kim founded Kakao in 2010, and the company, which he holds approximately a 24% stake in, employed over 10,000 people as of 2020. At one time, he was the richest person in South Korea, with an estimated net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing that it will be up to the remaining employees to demonstrate that the company can continue to operate effectively without its founder.