A South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a takeover 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 prevent him from potentially fleeing the country or destroying evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, calling the arrest “unfortunate.”
The 58-year-old is alleged to have manipulated the stock of SM Entertainment amid a takeover attempt to obstruct Hybe, another leading K-pop agency, from acquiring it.
SM Entertainment and Hybe are two of the largest K-pop firms in South Korea, representing popular groups Aespa and BTS respectively. Kakao went on to acquire SM Entertainment, while last year, Kakao’s chief investment officer was also indicted on similar stock manipulation charges.
Founded in 2010 and headquartered in Jeju City, Kakao is significantly backed by Kim, who holds approximately a 24% stake in the company. As of 2020, over 10,000 people were employed there. At one time, Kim was considered South Korea’s richest person, with a net worth exceeding $13 billion.
Following the news of Kim’s arrest, Kakao’s stock fell by 5%. An expert from Korea University Business School stated that this may represent Kakao’s “biggest crisis,” emphasizing that it would be crucial for those remaining at the company to demonstrate effective management in the founder’s absence.