A South Korean billionaire and technology entrepreneur was arrested on Tuesday under allegations of stock price manipulation related to a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him amid concerns from prosecutors that he might flee the country or obstruct evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, labeling the allegations as false. The company expressed regret over the arrest, describing it as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to thwart another major K-pop agency, Hybe, from acquiring it. Both SM Entertainment and Hybe are leading companies in South Korea’s K-Pop industry, featuring popular groups like Aespa and BTS.
Kakao successfully acquired SM Entertainment, while last year, the chief investment officer of Kakao, Bae Jae-hyun, also faced indictment on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao, of which Kim holds a 24% stake, employed over 10,000 people by 2020. Once South Korea’s richest individual with a net worth exceeding $13 billion, Kim’s arrest resulted in a 5% drop in Kakao’s stock on Tuesday.
Woochan Kim, a professor at Korea University Business School, remarked that this situation could be Kakao’s “biggest crisis,” emphasizing the responsibility of the remaining leadership to demonstrate that the company can operate effectively in the founder’s absence.