A South Korean billionaire and technology executive has been arrested on allegations of stock price manipulation related to a prominent K-pop agency.
Kim Beom-su, the founder of tech giant Kakao, has not yet been formally charged with any crime. However, the Seoul Southern District Court has issued an arrest warrant over concerns that he may attempt to flee the country or destroy evidence pertinent to the investigation.
In a recent staff meeting at Kakao, Kim denied the allegations, asserting, “I have never instructed or condoned any illegal acts.” The company described the arrest as “unfortunate.”
The 58-year-old entrepreneur is being accused of manipulative practices involving the stock of SM Entertainment during a takeover attempt last year, allegedly to thwart rival K-pop agency Hybe from acquiring the company.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, associated with popular groups Aespa and BTS, respectively. Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Bae Jae-hyun, Kakao’s chief investment officer, was also indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, which is based in Jeju City. He holds approximately a 24% equity stake in the company, which employed over 10,000 individuals in 2020. At one time, Kim was recognized as South Korea’s wealthiest individual, with a net worth surpassing $13 billion.
Following the news of his arrest, Kakao’s stock price saw a decrease of 5%. Woochan Kim, a professor at Korea University Business School, commented that this could represent a significant crisis for Kakao, noting that it will be up to remaining executives to demonstrate the company’s stability in Kim’s absence.