A South Korean billionaire and technology entrepreneur was arrested on Tuesday on charges of allegedly manipulating the stock price of a major K-pop agency during a deal last year.
Kim Beom-su, the founder of Kakao, has not yet been formally charged. An arrest warrant was issued by the Seoul Southern District Court, with prosecutors expressing concerns that he might evade custody or destroy evidence.
“I have never instructed or condoned any illegal acts,” Kim stated during a staff meeting at Kakao last week, denying the allegations. The company characterized his arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment during a takeover bid last year to obstruct Hybe, another prominent K-pop agency, from acquiring it.
SM Entertainment and Hybe are among the largest K-Pop companies in South Korea, representing popular groups Aespa and BTS, respectively. Kakao eventually took over SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, faced similar stock manipulation charges.
Founded by Kim in 2010 and based in Jeju City, Kakao employed over 10,000 individuals in 2020, and Kim held a roughly 24% stake in the company. At one point, he was recognized as South Korea’s richest individual with an estimated net worth exceeding $13 billion.
Following news of his arrest, Kakao’s stock dropped by 5% on Tuesday. Woochan Kim, a professor at Korea University Business School, remarked that this incident could represent Kakao’s “biggest crisis,” adding that it would be essential for the remaining leadership to demonstrate the company’s capability to thrive without its founder.