A South Korean billionaire and technology entrepreneur has been apprehended for allegedly 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, as reported by the New York Times. The Seoul Southern District Court issued an arrest warrant to ensure his custody, with prosecutors expressing concerns about potential flight risks or the destruction of evidence.
Kim has publicly denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a recent staff meeting at Kakao. The company described his arrest as “unfortunate.”
At 58 years old, Kim is accused of manipulating the stock of SM Entertainment during a takeover to thwart another major K-pop agency, Hybe, from acquiring it. SM Entertainment and Hybe are two of the leading companies in South Korea’s K-Pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually completed the acquisition of SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao is a significant player in the tech industry. Kim holds approximately a 24% stake in the company, which had more than 10,000 employees in 2020. At one point, he was recognized as South Korea’s wealthiest individual, with an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock saw a decline of 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this could represent Kakao’s “biggest crisis.” He emphasized that it is now the responsibility of the remaining company leadership to demonstrate that Kakao can continue to operate effectively in Kim’s absence.