A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock prices 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 has issued an arrest warrant for him to ensure his custody, as prosecutors are concerned he may flee the country or destroy evidence.
Kim has denied the allegations, stating in a recent meeting with staff at Kakao, “The allegations are not true. I have never instructed or condoned any illegal acts.” The company described his arrest as “unfortunate.”
The 58-year-old is accused of manipulating the stock of SM Entertainment during a takeover attempt last year, in a bid to thwart rival K-pop agency Hybe from acquiring it. SM Entertainment and Hybe are among the largest K-pop companies in South Korea, representing popular groups Aespa and BTS, respectively.
Ultimately, Kakao was able to acquire SM Entertainment. Last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Kim established the company, which is based in Jeju City, in 2010. He owned approximately a 24% stake in Kakao, which employed over 10,000 individuals as of 2020. He was once recognized as South Korea’s richest person, with a net worth surpassing $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. Woochan Kim, a professor at Korea University Business School, suggested this might be Kakao’s most significant challenge to date. He emphasized that it will be up to the remaining leaders at the company to demonstrate effective operations in Kim’s absence.