A South Korean billionaire and tech entrepreneur has been arrested on suspicion of manipulating the stock price of a prominent K-pop agency during a takeover effort last year.
Kim Beom-su, the founder of the tech firm Kakao, has not yet been formally charged, but the Seoul Southern District Court has issued an arrest warrant to ensure his custody. Prosecutors are concerned that he may flee the country or destroy evidence related to the case.
In a meeting at Kakao prior to his arrest, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the situation as “unfortunate.”
The 58-year-old is accused of influencing stock prices of SM Entertainment to thwart its acquisition by Hybe, another leading K-pop agency. Both SM Entertainment and Hybe represent major K-pop groups, including Aespa and BTS.
Kakao completed the acquisition of SM Entertainment last year. This incident follows the indictment of Kakao’s chief investment officer, Bae Jae-hyun, on similar stock manipulation charges.
Founded in 2010, Kakao, headquartered in Jeju City, has grown to employ over 10,000 people as of 2020, with Kim holding around a 24% stake in the company. He was once regarded as South Korea’s richest person, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock price fell by 5%. A business professor commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the importance for the remaining leadership to ensure the company continues to operate effectively in Kim’s absence.