A South Korean billionaire and tech entrepreneur has been arrested for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant to ensure his custody, citing concerns that he might flee the country or destroy evidence.
Kim, 58, has claimed that the allegations against him are false and stated, “I have never instructed or condoned any illegal acts,” during a recent staff meeting. Kakao described the arrest as “unfortunate.”
He stands accused of manipulating shares of SM Entertainment during a takeover bid last year, allegedly to thwart Hybe, another leading K-pop agency, from acquiring the company. SM Entertainment and Hybe are among the largest K-Pop firms in South Korea, representing popular groups like Aespa and BTS.
Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded by Kim in 2010 and based in Jeju City, Kakao has grown to employ over 10,000 individuals as of 2020, and at one point, Kim was the wealthiest person in South Korea, with an estimated net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock price fell by 5%. Woochan Kim, a professor at Korea University Business School, suggested this could be Kakao’s “biggest crisis” and emphasized the importance of the remaining staff demonstrating that the company can function effectively without its founder.