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 transaction last year.
Kim Beom-su, the founder of technology firm Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court issued an arrest warrant for him, expressing concerns that he might flee the country or destroy evidence related to the case.
Kim has denied the allegations, stating during a Kakao staff meeting last week, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao has described the arrest as “unfortunate.”
The 58-year-old is accused of engaging in stock manipulation involving SM Entertainment, a major K-pop company, in an effort to thwart rival agency Hybe from acquiring it. SM Entertainment and Hybe represent two of South Korea’s largest K-pop entities, with artists such as Aespa and BTS under their banners.
Kakao eventually completed its acquisition of SM Entertainment. In addition, last year, Kakao’s chief investment officer, Bae Jae-hyun, was indicted on similar stock manipulation charges.
Founded in 2010 and based in Jeju City, Kakao is a major player in the tech industry, with Kim owning approximately 24% of the company. In 2020, Kakao employed over 10,000 individuals, and at one point, Kim was recognized as South Korea’s wealthiest individual, boasting an estimated net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. A business professor at Korea University noted that this could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company can operate effectively in the absence of its founder.