A South Korean billionaire and technology entrepreneur has been arrested on accusations of 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 issued an arrest warrant to ensure his presence, as prosecutors expressed concerns that he might flee the country or destroy evidence.
In a meeting with staff at Kakao last week, Kim strongly denied the allegations, asserting, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
Kim, 58, faces allegations of manipulating the stock of SM Entertainment during a takeover bid last year, allegedly aimed at thwarting rival K-pop agency Hybe from acquiring the company. SM Entertainment and Hybe are two leading firms in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao ultimately completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted for stock manipulation offenses.
Founded in 2010 by Kim, Kakao is headquartered in Jeju City and employed over 10,000 staff members by 2020. Kim was once recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this could be Kakao’s “biggest crisis.” He emphasized that it is crucial for the remaining management to demonstrate the company’s ability to operate successfully in the absence of its founder.