A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech company Kakao, has not yet been formally charged. The Seoul Southern District Court issued an arrest warrant for him due to concerns that he might flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim stated, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old is accused of manipulating the shares of SM Entertainment during a takeover attempt last year to hinder another prominent 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 eventually succeeded in acquiring SM Entertainment, and last year, the company’s chief investment officer, Bae Jae-hyun, faced similar charges related to stock manipulation.
Kim founded Kakao in Jeju City in 2010 and retains approximately a 24% ownership stake in the company, which employed over 10,000 people as of 2020. At one time, he was South Korea’s richest individual, with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, remarked that this may represent Kakao’s “biggest crisis.” He emphasized that it would now be crucial for the remaining company leadership to demonstrate that Kakao can operate effectively without its founder.