A South Korean billionaire and tech executive was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a deal last year. Kim Beom-su, the founder of Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court due to concerns that he might flee the country or destroy evidence.
In response to the allegations, Kim claimed, “The allegations are not true. I have never instructed or condoned any illegal acts,” during a staff meeting at Kakao last week. The company described the arrest as “unfortunate.”
Kim, aged 58, is accused of manipulating SM Entertainment’s stock as part of a strategy to thwart rival K-pop agency Hybe’s acquisition efforts last year. SM Entertainment and Hybe are major players in the K-pop industry, representing popular groups Aespa and BTS, respectively.
Kakao eventually acquired SM Entertainment. Additionally, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment for stock manipulation last year.
Founded in 2010 and based in Jeju City, Kakao employs over 10,000 people. At one time, Kim was regarded as South Korea’s richest individual, with a net worth exceeding $13 billion. Following the news of his arrest, Kakao’s stock declined by 5%.
Woochan Kim, a professor at Korea University Business School, suggested this could be Kakao’s “biggest crisis,” stating that it would now be up to those remaining in the company to demonstrate its ability to operate effectively without its founder.