A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday amid allegations of stock price manipulation concerning a leading K-pop agency during a deal last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim has denied the allegations, asserting during a Kakao staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the situation as “unfortunate.”
The 58-year-old businessman is suspected of manipulating the stock of SM Entertainment in connection with a takeover effort last year, aimed at blocking Hybe, another prominent K-pop agency, from purchasing it.
Both SM Entertainment and Hybe are major players in South Korea’s K-Pop industry, representing popular groups like Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment, after which Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on charges related to stock manipulation.
Kim founded Kakao in 2010, which is based in Jeju City. He held approximately a 24% ownership stake in the company, which employed over 10,000 individuals as of 2020. Once recognized as South Korea’s wealthiest individual, his net worth was estimated to exceed $13 billion.
Following the news of his arrest, Kakao’s stock experienced a 5% decline on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this might represent “Kakao’s biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s operational resilience in Kim’s absence.