A South Korean billionaire and technology entrepreneur was taken into custody on Tuesday for allegedly manipulating the stock price of a prominent K-pop agency during a deal last year.
Kim Beom-su, the founder of the tech firm Kakao, has not faced formal charges yet, according to reports. The Seoul Southern District Court has issued an arrest warrant for him, as prosecutors expressed concerns that he might flee the country or destroy evidence.
Kim, 58, denied the allegations, stating during a company meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment during a takeover attempt last year to obstruct Hybe, another significant K-pop agency, from acquiring it. Both SM Entertainment and Hybe are major players in the K-pop industry, representing iconic groups like Aespa and BTS.
Kakao eventually took over SM Entertainment. Last year, Kakao’s Chief Investment Officer Bae Jae-hyun was also indicted on stock manipulation charges.
Founded by Kim in 2010 and based in Jeju City, Kakao had over 10,000 employees in 2020. At one point, Kim was South Korea’s richest individual, with a net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock fell by 5%. Woochan Kim, a professor at Korea University Business School, suggested that this could be Kakao’s “biggest crisis.” He emphasized that it will be up to the remaining leadership to demonstrate the company’s capability to operate effectively without its founder.