A South Korean billionaire and technology executive was apprehended on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court granted an arrest warrant amid concerns from prosecutors that he might flee the country or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week. The company expressed that his arrest is “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment in a bid to obstruct Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are among South Korea’s largest K-Pop companies, known for representing artists like Aespa and BTS, respectively. Ultimately, Kakao ended up acquiring SM Entertainment. Notably, last year, Kakao’s chief investment officer Bae Jae-hyun was also charged with stock manipulation.
Kim, who established Kakao in 2010, held approximately a 24% stake in the company, which employed over 10,000 individuals in 2020. At one time, he was considered South Korea’s richest person, with a 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 could be Kakao’s “biggest crisis” and emphasized the need for the remaining team to demonstrate the company can operate effectively in the absence of its founder.