A South Korean billionaire and tech entrepreneur, Kim Beom-su, was arrested on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a transaction last year.
According to reports, Kim, the founder of the tech firm Kakao, has not yet been formally charged. The Seoul Southern District Court approved an arrest warrant to ensure his custody amid concerns that he may flee the country or destroy evidence.
In a recent staff meeting at Kakao, Kim denied the allegations, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao remarked that the arrest was “unfortunate.”
The 58-year-old is accused of trying to manipulate the stock of SM Entertainment in an effort to thwart Hybe, another significant K-pop agency, from acquiring it. SM Entertainment and Hybe are two of South Korea’s largest K-pop firms, representing popular acts Aespa and BTS, respectively. Ultimately, Kakao succeeded in acquiring SM Entertainment. Last year, Kakao’s Chief Investment Officer, Bae Jae-hyun, was also indicted on similar stock manipulation charges.
Kim founded Kakao in 2010, with its headquarters located in Jeju City. He held approximately a 24% stake in the company, which employed over 10,000 people as of 2020. At one point, Kim was regarded as South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock fell by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, noted that this situation could be Kakao’s “biggest crisis.” He emphasized that it will be crucial for remaining leadership at the company to demonstrate that it can operate effectively without its founder.