A South Korean billionaire and technology pioneer was arrested 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 Kakao, has not been formally charged, according to reports. An arrest warrant was issued by the Seoul Southern District Court to ensure his custody, as prosecutors expressed concerns he might attempt to flee the country or destroy evidence.
Kim recently denied the allegations during a staff meeting, stating, “The allegations are not true. I have never instructed or condoned any illegal acts.” Kakao described the arrest as “unfortunate.”
The 58-year-old entrepreneur is accused of manipulating the stock of SM Entertainment last year to thwart an acquisition attempt by Hybe, another leading K-pop agency.
SM Entertainment and Hybe are major players in South Korea’s K-pop industry, with notable acts like Aespa and BTS under their wings. Kakao ultimately acquired SM Entertainment, and last year, Kakao’s chief investment officer, Bae Jae-hyun, was also indicted on charges of stock manipulation.
Founded in 2010 and based in Jeju City, Kakao saw Kim holding approximately a 24% stake, employing over 10,000 people as of 2020. At one point, he was recognized as South Korea’s richest individual, with a net worth exceeding $13 billion.
Following the news of his arrest, Kakao’s stock dropped by 5%. An expert from Korea University Business School remarked that this situation could represent Kakao’s “biggest crisis,” emphasizing the need for the remaining leadership to demonstrate the company’s resilience in Kim’s absence.