A South Korean billionaire and technology 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 Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court amid concerns from prosecutors that he might attempt to flee the country or destroy evidence.
Kim asserted that the allegations against him are unfounded. “I have never instructed or condoned any illegal acts,” he stated during a recent staff meeting at Kakao, which described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment as part of a strategy to obstruct rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are two of South Korea’s leading K-pop companies, representing popular groups Aespa and BTS, respectively.
Kakao ultimately succeeded in acquiring SM Entertainment. Last year, Bae Jae-hyun, the chief investment officer of Kakao, faced indictment on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim owning approximately 24% of the company. In 2020, Kakao employed over 10,000 people, and at one time, Kim was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock price fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this incident could represent the “biggest crisis” for Kakao, emphasizing the need for the remaining team to demonstrate effective management in the founder’s absence.