A South Korean billionaire and technology entrepreneur was apprehended on Tuesday on allegations of stock price manipulation involving a prominent K-pop agency during a deal conducted last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant due to concerns 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 labeled his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment amid a takeover attempt last year, aiming to thwart another major K-pop agency, Hybe, from acquiring it.
Both SM Entertainment and Hybe are significant players in the K-Pop industry, representing popular acts like Aespa and BTS.
Kakao eventually succeeded in acquiring SM Entertainment. Previously, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Founded in 2010, Kakao is headquartered in Jeju City, with Kim possessing approximately a 24% stake in the company, which employed over 10,000 individuals as of 2020. At one time, Kim was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
In the wake of the news about his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, commented that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership within the company to demonstrate its capability to operate effectively in the absence of its founder.