A prominent South Korean billionaire and tech entrepreneur was arrested on Tuesday for allegedly manipulating the stock price of a leading K-pop agency during a transaction last year.
Kim Beom-su, the founder of the tech giant Kakao, has not yet been formally charged, according to reports. The Seoul Southern District Court has issued an arrest warrant for his custody, as prosecutors express concerns that he might leave the country or destroy evidence.
Kim, 58, denounced the allegations as false, stating during a recent staff meeting that he has never directed or sanctioned any illegal activities. Kakao labeled the arrest as “unfortunate.”
He is accused of manipulating the stock of SM Entertainment amid a takeover endeavor last year, aiming to thwart rival K-pop agency Hybe’s acquisition efforts.
SM Entertainment and Hybe are two of the largest K-pop companies in South Korea, representing notable groups such as Aespa and BTS respectively.
Kakao eventually took over SM Entertainment. Previously, Kakao’s chief investment officer, Bae Jae-hyun, faced indictment on similar stock manipulation charges.
Founded by Kim in 2010, Kakao is based in Jeju City and employed over 10,000 individuals by 2020. At one point, Kim was recognized as South Korea’s wealthiest individual, with a net worth exceeding $13 billion.
Following the 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.” He emphasized the responsibility of remaining leadership to ensure the company continues to function effectively in the founder’s absence.