A South Korean billionaire and technology entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
Kim Beom-su, the founder of the technology firm Kakao, has not yet been formally charged. According to reports, the Seoul Southern District Court 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 described the arrest as “unfortunate.”
The 58-year-old businessman is suspected of manipulating the stock of SM Entertainment during a takeover attempt last year, intending to block Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of South Korea’s largest K-Pop companies, representing prominent groups such as Aespa and BTS, respectively. Kakao eventually completed its acquisition of SM Entertainment. Last year, Kakao’s chief investment officer Bae Jae-hyun was also indicted for stock manipulation.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people as of 2020, with Kim holding approximately a 24% stake in the company. At one time, he was considered South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, indicated that this may represent Kakao’s most significant crisis yet. “It would be the job of those who remain at the company to show that it can run well even with the founder not around,” he noted.